In a significant move to support the electric vehicle (EV) industry, the Indian government has announced an extension of the Faster Adoption and Manufacturing of Electric Vehicles (FAME-II) scheme. Originally slated to conclude on March 31, 2024, the scheme will now run until July 31, 2024, providing a crucial four-month extension period.
According to a report by Business Standard, the extension aims to prevent disruptions in the EV sector. To facilitate this extension, an additional allocation of Rs 500 crore has been earmarked to finance demand incentives for electric two-wheelers (e2W) and electric three-wheelers (e3W). This injection of funds is expected to alleviate financial pressures on EV manufacturers and spur greater adoption of electric vehicles across the country.
In preparation for future initiatives, the Expenditure Finance Panel has proposed a budget of Rs. 10,000 crore for the upcoming FAME-III initiative. Upon approval of the FAME-III budget, the allocated Rs. 500 crore from the extension will be adjusted accordingly. However, the approval for FAME-III is anticipated after the upcoming elections.
The extension comes as a relief for EV companies that were struggling to meet the original deadline. Several manufacturers, such as Ola Electric and Bounce Infinity, resorted to significant discounts to clear their inventory by the March 31 deadline.
Launched in 2019 with a three-year budget of Rs 10,000 crore, the FAME-II scheme aims to promote the adoption of electric vehicles in India. Its objectives include subsidizing 5 lakh electric three-wheelers, 10 lakh electric two-wheelers, 55,000 electric passenger vehicles, and 7,000 electric buses.
As of December 21, 2023, approximately Rs 5,422 crore has been utilized under the initiative, subsidizing a total of 12,16,380 vehicles.
Meanwhile, there has been a notable surge in e2W sales in India, with year-on-year sales increasing by over 24 percent. Data from the Vahan website indicates that sales surpassed 81,963 units in February 2024 and exceeded 800,000 units during the 11 months of FY24. However, e2W registrations experienced a decline to around 45,000 units following the reduction in FAME-II subsidies in June.
FAME II underscores the government’s commitment to addressing environmental concerns, particularly reducing pollution. By incentivizing the use of renewable energy sources in transportation, the scheme aligns with broader sustainability initiatives, aiming to promote greener and more eco-friendly transportation solutions nationwide.
