Cabinet likely to approve new scheme for promoting electric vehicles

Scheme outlay expected to be Rs 10,900 cr, new name to be coined in place of 'FAME'

A meeting of the Union Cabinet is on Wednesday expected to approve a new scheme for promoting electric vehicles (EVs), 'Business Standard' has learnt from sources.

A budget of Rs 10,900 crore is likely to be sanctioned for the new scheme, according to the sources. The scheme will replace the previous Faster Adoption and Manufacturing of Electric Vehicles (FAME), which was introduced in 2015 with an initial outlay of approximately Rs 900 crore. It was followed by FAME-II which had an outlay of Rs 11,500 crore.

The government is likely to give a new name for the scheme and drop 'FAME'. The new scheme is likely to announce support for e-ambulances and e-trucks, with each getting more than Rs 200 crore.

The Ministry of Heavy Industries (MHI) has submitted the proposal for the Cabinet’s consideration. 'Business Standard' reached out to the MHI spokesperson, and the article will be updated once their response is received. The Union Cabinet , chaired by Prime Minister Narendra Modi, is expected to convene on Wednesday.

'Business Standard' had in June reported that the upcoming scheme for promotion of EV is likely to get Rs 10,600 crore budget.

A week ago H D Kumaraswamy, Union Minister for Heavy Industries, said that the FAME-III will be rolled out in the next two months. Recently, he also said the  Electric Mobility Promotion Scheme (EMPS) will be extended until the rollout of the FAME-III. EMPS was brought in when FAME-II expired, after the industry sought further financial support.

However, Nitin Gadkari, Union Minister for Road, Transport and Highways, recently said the EVs no longer require subsidies and are competitively priced against petrol, diesel vehicles. He later clarified that it is his personal view and MHI will decide the scheme for EVs.

The new scheme is anticipated to focus on further accelerating the adoption of EVs across public transport and private use, as well as enhancing EV infrastructure like charging stations.

The new scheme will place particular emphasis on promoting domestic manufacturing of EV components and reducing dependency on imports, aligning with the government’s broader ‘Make in India’ manufacturing initiative.

The FAME schemes propelled the growth of the EV industry, driving sales from less than 7,000 units in FY15 to 1.5 million in FY24, constituting 6.8 per cent of all automobile sales. However, when FAME II concluded in March 2024, the industry experienced a slowdown.

The government’s efforts to promote EVs also led to an increase in the number of players in the industry, from 124 in FY15 to 731 in FY24.

Government data shows that under FAME I, approximately 278,000 pure EVs received support through demand incentives totalling Rs 343 crore. Under FAME II, more than 1.6 million vehicles were supported. The government had to increase the subsidy outlay from Rs 10,000 crore to Rs 11,500 crore to meet the demand until March 31, 2024.

From April, the government implemented the EMPS 2024 with Rs 500 crore. However, the government has extended the EMPS by two months to the end of September. The scheme's outlay has increased from Rs 500 crore to Rs 778 crore for subsidising electric two- and three-wheelers.