Budget 2024: Government may extend FAME II incentive scheme for manufacturing electric vehicles

Budget 2024: The government is thinking about extending its main electric vehicle incentive program, FAME II, into the fiscal year 2025. It’s looking into getting more funds in the interim budget to support the scheme.
According to ET, because the finance ministry hasn’t approved FAME III, there’s a suggestion to extend the current edition until a new framework is in place.If accepted, this extension would streamline the process, as it wouldn’t need multiple approvals like launching a new scheme. The goal is to maintain momentum in the electric vehicle market, particularly since Budget 2024 on February 1 will be a vote on account due to the upcoming general elections in April-May.

FAME III approval hesitation: Budget concerns and shift in EV support

The finance ministry seems cautious about approving FAME III, projecting a budget of over Rs 30,000 crore for the next five years to encourage the use of electric two-wheelers, buses, tractors, and other vehicles. Insiders say that prominent electric two-wheeler manufacturers, who benefited from FAME I and II, may not need government support anymore. The general view is that resources are limited, and if used to promote electric mobility, they should focus on developing the ecosystem rather than providing benefits to individuals who can afford electric vehicles.
Drive for cleaner air: 30% EV sales target by 2030
India, facing pollution challenges with three cities among the world’s top 10 polluted, is actively encouraging electric mobility to reduce vehicle emissions. The government targets electric vehicles to make up 30% of all new vehicle sales in the country by 2030. Currently, the market share of electric vehicles is relatively small, ranging from about 2% in cars to 5% in two-wheelers, even though India is projected to become the third-largest global automobile market by the end of the decade.

FAME II: Subsidies for EVs and fast-charging stations
Through FAME II, the Ministry of Heavy Industries (MHI) has provided Rs 5,228 crore in subsidies for approximately 1.15 million electric vehicles sold up to December 1, 2023. Furthermore, the government has earmarked Rs 800 crore under FAME II for public sector oil marketing companies (OMCs) like IOCL, BPCL, and HPCL to set up 7,500 fast-charging stations across the country. This effort seeks to address range anxiety and promote the broader acceptance of electric vehicles.