Electric 2W, 3W companies likely to face retest for FAME-III scheme

Re-certification needed for all models; EMPS may be extended for two more months

Makers of electric two- and three-wheelers have to retest and recertify their models in order to stay eligible for subsidies under the third version of the Faster Adoption and Manufacturing of Electric (And Hybrid) Vehicles (FAME) scheme, which is in the works.

This is what major testing and certification agencies for vehicles under the Ministry of Heavy Industries (MHI), such as the Automotive Research Association of India (ARAI), have conveyed to them in a meeting.

The move comes at a time when sources say the government is planning to extend the electric mobility promotion scheme (EMPS) 2024 — aimed at boosting green mobility and the development of the electric vehicle (EV) manufacturing ecosystem — by two months, with an additional budget apart from the ~500 crore sanctioned earlier. EMPS was set to conclude on July 31.

At present, there are over 40 to 50 models, which will have to go through the scrutiny of testing agencies under FAME-III.    

The proposed FAME-III, is awaiting Cabinet clearance. In the Budget for FY25, the government has earmarked ~2,671 crore for FY25. However, the broader contours of the scheme are still being worked out.     Companies will need to wait for at least 6- 8 weeks to get their re-certification from ARAI or other testing agencies  once the FAME- III kicks in.

ARAI — a co-operative industrial research association under the aegis of the automotive industry with the Ministry of Heavy Industries — like others, first retests a vehicle based on the FAME-III guidelines. 

Its officials then visit the factory to ensure vehicles are being assembled according to the guidelines. Finally, random checks are done on suppliers to check all processes are being followed. 

This means that companies have to absorb the cost of the subsidy for the interim period, leading to a financial burden on their books.

“Hypothetically, if FAME-III kicks off on October 2, we can go for the re-certification of our existing models and then wait for 6-8 weeks before it is cleared by ARAI. In this interim period, we will have to sell the models by absorbing the cost of the subsidy as they will not be eligible under FAME-III. That’s a big financial loss,” a senior executive of a two-wheeler company said.

Electric vehicle companies also complain that disbursements through the EMPS scheme in the past four months have come in a trickle.

Obstacle course 
 

> FAME-III still in works and will require Cabinet approval

> Union Budget earmarked ~2,671 crore for FY25 for EV subsidies

> Companies say re-certification will take 6-8 weeks. Till this process is completed they won’t get any subsidy from the govt and will have to absorb this financial burden

> Firms allege that disbursements of subsidy is slow and a substantial amount is still pending