FAME scheme extension plan may be on Union Cabinet agenda tomorrow

The MHI has made its last efforts to secure approval for extending the scheme before the March 31 deadline for FAME-II

Prime Minister Narendra Modi-led Union Cabinet, which is scheduled to meet on Wednesday, is likely to take a call on the extension of the FAME scheme, whose second phase comes to an end on March 31.

According to sources, the Ministry of Heavy Industries (MHI) has prepared a note for the Cabinet regarding the extension of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME India) Scheme, hinting at a disruption to the burgeoning e-mobility ecosystem in India if there was a break in the implementation of the scheme.

The ministry has given two proposals: one entails extending the Rs 12,600 crore scheme for two years, while the other suggests a four-month extension with a budget of Rs 500 crore.

“With this being the final Cabinet meeting before the general election, two proposals have been forwarded. One aims to provide support to the industry until a new government is formed, while the other proposes a two-year extension,” a government official said.

The proposal for a two-year extension of the scheme with an initial outlay of Rs 12,600 crore underwent deliberation by the Expenditure Finance Committee on February 29. Following which, the committee approved the scheme with a revised outlay of Rs 10,000 crore.

Additionally, the ministry has proposed a reduction in the per kWh subsidy for electric two-wheelers (e2W) and electric three-wheelers (e3W) to approximately Rs 5,000/kWh from the previous rate of around Rs 10,000/kWh.

For e2Ws, the subsidy cap is set at Rs 10,000 per vehicle. For e3Ws the subsidy maximum cap has been put at Rs 50,000.

This scheme would cover demand incentives for e2W and e3W to be sold and registered during a four-month period from April 1 to July 31.

The expenditure of Rs 500 crore will be a part of the overall outlay of Rs 10,000 crore proposed for the FAME-III scheme.

Government data shows that under FAME I, about 2,78,000 pure EVs were supported with total demand incentives of Rs 343 crore. 

FAME II started in April 2019 with an outlay of Rs 10,000 crore for a three-year period, but then extended to March 2024.

Electric vehicle (EV) sales this year have witnessed a robust increase of over 45 per cent so far, notwithstanding the subsidy cuts and regulatory shifts.

Total EV registration figure in 2023 was shy of 1.5 million units, significantly higher than last year’s score of a little over 1 million.

All this has pushed the overall EV penetration in the country beyond 5 per cent – to 6.3 per cent against 4.8 per cent in 2022.