FAME 3.0: Govt considering a renewed subsidy plan to support EV industry

Companies engaged in the electric two-wheeler industry have been demanding a fresh round of financial support, arguing that a complete withdrawal will kill sales

The government may come up with a renewed subsidy scheme for the Faster Adoption and Manufacturing of Electric Vehicles scheme or FAME 3.0, according to a report in The Times of India (ToI). The subsidy is likely to cover light commercial vehicles along with supporting research and development in the renewable energy sector.

So far, however, the government has said it is evaluating the proposal by industry representatives. Quoting heavy industries secretary Kamran Rizvi, ToI reported, "We have received proposals from agencies such as Siam and Ficci. We are in the process of analysing them. The question is whether another round of FAME is needed when PLI (production-linked incentives) has already been announced." The official did not share any additional details about the FAME 3.0 scheme.

The government is looking to balance between the PLI and the FAME scheme. The official cited above said that a fresh tender for 20 gigawatts of advanced chemistry cells is expected to be issued next month. However, it will be done after discussions with industry players scheduled next week.

In the first round of bidding, Ola and Reliance emerged as successful bidders. Ministry data suggests that electric two-wheelers (E2W) account for only 5 per cent of the total two-wheeler sales. However, in some cities, the sale of E2W has risen to almost 25 per cent of the new vehicle registrations, the report said.

Demand from the industry

Companies engaged in the electric vehicle industry have been demanding a fresh round of financial support, arguing that a complete withdrawal will kill sales. The demand is particularly strong from E2W manufacturers.

Governments around the world are doling out subsidies to support the shift to cleaner fuel, with a special emphasis on electric vehicles.

What is the FAME scheme?  

In order to fastrack the switch to green mobility, the government started the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, which provides incentives for purchasing electric vehicles. 

Phase one of this scheme was launched for two years, which commenced on April 1, 2015. The scheme was subsequently extended and allowed until March 31, 2019. A total of Rs 529 crore was allocated towards the FAME 1.0, which was utilised fully.

The government commenced phase two of the FAME Scheme with Rs 10,000 crore for a period of three years. The scheme started on April 1, 2019. Eighty-six per cent of this money was allocated for demand incentives to create a demand for electric vehicles in the country.