If you are an EV enthusiast or a business owner who is planning to buy one in the near future, you must be aware that the Indian government is encouraging faster adoption of EVs by providing various supports, and one of the notable ones is the FAME scheme.
Let us understand the FAME scheme, its stages, and what to expect in the Interim Budget 2024, which is going to be rolled out on 1st Feb 2024.
What is FAME India Scheme?
‘Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India’ (FAME) was launched in 2011 as a part of the National Mission on Electric Mobility. This government initiative propels the country towards a cleaner future by encouraging the use of electric and hybrid vehicles. With a substantial ₹10,000 crore budget, it provides generous incentives across various vehicle categories.
Phases of FAME India Scheme
The FAME India scheme has two phases, i.e. FAME I and FAME II.
FAME I - The first phase
The first phase of the FAME India Scheme commenced in 2015 and was effective till 31st March 2019.
The FAME I was the initial step towards inclination towards EVs and was focused on four key areas: demand creation, technology platform, pilot projects, and charging infrastructure.
During this phase, the government installed 427 charging stations, and the scheme was supported by an allotment of ₹895 crores to cover operations. Nearly 2.8 lakh electric vehicles were supported with an amount of ₹359 crores.
FAME II - The second phase
in April 2019, the second phase of this scheme commenced and continued till 31st March 2022. The budget allocated for this phase was ₹10,000 crores.
Vehicle category-wise incentive offered under Phase II:
E-four wheelers: Affordable electric cars priced under ₹15 lakh receive a ₹1.5 lakh boost.
Hybrid four-wheelers: Eco-conscious hybrids under ₹15 lakhs get a ₹13,000-₹20,000 push.
E-rickshaws/3-wheelers: These convenient last-mile solutions get a ₹50,000 subsidy.
E-buses: Public transport gets a ₹50 lakh green signal for each bus under ₹2 crore.
Note: FAME II is extended till 31st March 2024.
Budget 2024 & FAME III - What EV industry is looking forward to?
With the conclusion of FAME II on the horizon, the electric vehicle industry is experiencing a growing sense of anticipation and tension. The upcoming Budget 2024 is about to unveil the third phase of this scheme, and this will surely mark a turning point for the EV industry in India.
Even after all the efforts the Indian government has put into encouraging its citizens to switch to EVs, many potential vehicle buyers are hesitant to go for an EV. According to a survey conducted by 'The Economic Times', on January'24 the lack of charging infrastructure is the primary reason for this. In the survey, 51.7 per cent of the respondents stated that to expedite EV adoption in India, the government must improve charging infrastructure. Hence, this survey clarifies that one of the major demands for Indian EV buyers is an improved charging infrastructure.
Moving ahead, another demand from the updated scheme within the industry is the continuation of current purchase incentives. Knowing that the upfront price of EVs is generally 30%-40% higher than similar ICE vehicles, the purchase incentives hold a high value in making the purchase decision.
Now, if we view this scheme through the lens of EV service providers, it is the subsidy that comes in the form of reduced rates for land or space allocation to set up charging stations, tax reductions, etc. If this budget shows inclinations towards these, building a better charging infrastructure within public-private partnerships will be an easy task.
Original equipment manufacturers (OEMs) have asked the government to consider making EV loans cheaper. Additionally, more financial institutions should provide EV loans, especially for commercial EVs. At present, getting a loan for a commercial EV is slightly trickier than obtaining a personal loan or home loan. Battery recycling companies are hoping for some relief on import duties for used batteries that they can then convert into energy storage solutions.
The Last Lines
As we are gearing up for budget 2024, every EV enthusiast is hopeful that the government will look into what could have been done better in phase I and phase II of FAME scheme and come up with a plan that helps EV buyers, manufacturers as well as service providers. When all these three pillars of the EV industry get ample support from the government, the road ahead towards replacing ICE vehicles with EVs will become much smoother.
As FAME II is coming to an end, and it remains uncertain what FAME III has in store for the EV industry, now is the best time to invest in EVs. The FAME II subsidies are the highest subsidies on EVs so far. Additionally, road tax exemption and concessions on the registration fee are added advantages you will receive if you buy an EV now.