Only 38% of Fame 2 subsidy used so far in FY24, shows govt data

The Ministry of Heavy Industries (MHI) has stated that the total utilisation of the FAME-II subsidy fund electric vehicles (EVs) till January 31 for FY24 was Rs 1,980.83 crore, which is only 38 per cent of its total allocation. 

In 2023-24, according to MHI, the budgeted allocation was Rs 5,171.97 crore.

Responding to an unstarred question in the Rajya Sabha, the MHI has revealed that the entire budgeted allocation was used up in the first three years, beginning from 2019-20, falling marginally in 2022-23, but in 2023-24, there is still a huge gap, with just two months left for the completion of the FAME-II scheme.

Under phase II, a subsidy amounting to Rs 5,790 crore has been given to manufacturers on the sale of 1.3 million EVs as on January 31, 2024. This is based on details of claims on the FAME-II portal as on January 31, 2024.  

The MHI has also sanctioned 6,862 e-buses for various cities, state transport undertakings, and state governments for intracity operations. It has supplied 6,862 e-buses in addition to 3,487 e-buses to state transport undertakings as on November 29, 2023.    

The ministry has also sanctioned 2,877 EV charging stations in the same period in 68 cities across 25 states and union territories. However, out of these,  only 148 have been constructed and are operational.

MHI had also sanctioned Rs 800 crore as capital subsidy to the three OMCs under the ministry of petroleum and natural gas for the setting up of 7,432 EV charging stations.

Electric vehicle makers say that the gap between allocation and real disbursements has been primarily due to the fact that even though companies have passed on the subsidy while selling their vehicles (listed on the FAME 2 website), they have not received the money from the government. In the case of electric two-wheelers,  disbursements  have been stuck for as long as six months, leading to a serious impact on the companies’ working capital requirements.

There is considerable uncertainty over whether the FAME subsidy scheme will be extended beyond March 31. The interim Budget has allocated a mere Rs 2671 crore for it in FY25, which reflects a sharp drop in allocation — from Rs 5172 crore for FY 24. 

The MHI has been pushing for an extension of the subsidy scheme, with the focus on pubic electric transportation and expansion of charging stations.