Government proposes to expand scope of FAME benefits, Rs 40,000 to 50,000 crore incentive under works

Sources say that the proposed FAME (Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India) 3 scheme is almost 4-5 times bigger than the Rs 10,000 crore subsidy extended in FAME 2.

By Amit Vijay M  calendar 13 Aug 2023 Views icon6195 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp

In a bid to accelerate the adoption of zero emission vehicles, the Government of India is planning to expand the segment into electric bicycles, quadricycles and large commercial vehicles, besides expanding the corpus for electric two wheelers, three wheelers and passenger vehicles.

Sources say that the proposed FAME (Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India) 3 scheme is almost 4-5 times bigger than the Rs 10,000 crore subsidy extended in FAME 2.

The new scheme is likely to have a sizable allocation for electric two-wheelers at about Rs 20,000 crore.

The draft note according to those familiar with the development, also states that the government will begin to focus on electric vehicles, three-wheelers, and buses while keeping an eye on new-age technologies such as Flex fuels, hydrogen, and the interplay between renewables and EVs. Sources cited that charging infrastructure too is expected to receive special attention.

The Government has outlined that a budget of around Rs 13,000 crore has been set aside for electric three-wheelers, with a strong emphasis on retrofitting existing ICE three-wheelers to EVs. As per sources close to Rs 12,000 crore has been set aside for electric buses and other modes of public transportation including subsiding buses using flex fuels, hydrogen ICE, biodiesel, and bio methanol.

The scheme also intends to sharpen its focus by allocating close to Rs 10,000 plus crore for promoting newer technologies such as supporting the convergence of renewables and electric vehicles, new battery technologies, as well as battery recycling. 

Government officials say with the Parliament’s monsoon session which came to a close on 11 August, FAME 3 will be tabled in the forthcoming winter session from Mid-November to mid-December period.

When questioned, a spokesperson at the Ministry of Heavy Industries Minister Mahendra Pandey denied that any such scheme is underway stating "Such talks of a FAME 3 in the works are purely speculative and no decision has taken on the matter by MHI Minister."
What industry expectations are

Gurusharan Singh, Director E Mobility India Electric Mobility Council said that while support incentives are key, what is more important is that government must consider simplicity in terms of compliance, qualification criteria, and execution of policies benefits disbursal.

"We are looking forward to the government on enabling supply side enablers like Charging Infrastructure, Battery  and Component Localisation, End of Life Scrapping and Recycling ecosystem through the revised FAME subsidy program," he added. 

How PMO is steering FAME 3

According to sources, the PMO has also taken note of the Committee of Estimates' 26th Report, which examined the Ministry of Heavy Industries' "Electric Vehicle (EV) Policy" in its report submitted in the Lok Sabha on March 24, this year.

"A comprehensive FAME-III scheme should be introduced once the extended period of FAME-II is completed to maintain the momentum until the desired level is reached. This will help EVs gain market share and compete with Internal Combustion Engine (ICE) automobiles", the report has said

A statement by retired IAS officer and ex-petroleum secretary Tarun Kapoor, who is currently an advisor to PM Modi, gives a good sense of the PMO's views on continued support for electric vehicles. He stated last month at an Assocham national conference on electric mobility that "it is just a matter of time before EVs take off in a big way."

He also noted that the government recognises the significance of electric vehicles, pointing out that "we must take this as our collective agenda for our country's future in terms of energy transition policies and plans." Kapoor stated.

According to the PM's advisor, the government is serious about developing a payment security mechanism, which is crucial for OEMs participating in the bus tenders, and sources say an announcement to that effect is also on the way.

M&M's domestic CV wholesales surge 10% YoY to 23,997 units in September 2023

auther Autocar Pro News Desk calendar02 Oct 2023

There was a positive growth trend observed in the LCV category, weighing between 2 and 3.5 tonnes.

Tata Motors sees 24% surge in MHCV wholesales in Q2FY24

auther Autocar Pro News Desk calendar02 Oct 2023

The company is expanding its electric bus production to meet growing demand.

MHI directs OMCs to float 7400 EV charger mega tender

auther Autocar Pro News Desk calendar02 Oct 2023

OMCs to float tender by month end.