The impending launch of the third edition of the Modi government’s flagship electric vehicle incentive scheme, FAME (Faster Adoption and Manufacturing of Electric Vehicles), is anticipated within the first 100 days of the new government’s tenure. This initiative, backed by an approximate outlay of INR 10,000 crore, underscores the government’s commitment to promoting electric and hybrid vehicles across the nation.
While the scheme is poised to extend financial incentives to electric two-wheelers, three-wheelers, and government-owned buses, deliberations regarding the inclusion of electric cars, especially for institutional buyers such as taxi aggregators, are ongoing.
“The proposed scheme mirrors the FAME 2 which lapsed in March 2024. It will be sent for approval to the Union cabinet shortly after the new government takes charge in June,” the official said. FAME 2 had offered a 15% subsidy on the sale price of electric scooters sold in the country” said the official. Since it (FAME-3) will be a new scheme, all companies seeking incentives on sale of electric vehicles would have to apply for fresh certification,” the official added.
The transition from EMPS to FAME 3
FAME 3 is set to build upon the foundation laid by the Electric Mobility Promotion Scheme (EMPS), which served as an interim measure following the conclusion of FAME 2 on March 31. With an initial allocation of INR 500 crore, EMPS aimed to bolster sales of electric two-wheelers and three-wheelers for a temporary period until the culmination of general elections in July. As per the proposed framework, FAME 3 is expected to span a two-year duration, deviating from the five-year tenure of FAME 2.
Expansion of Electric Bus Subsidies
Under FAME 2, the government incentivized the purchase of 7,000 electric buses, a figure expected to rise with the introduction of FAME 3. The new scheme is likely to increase the number of electric buses subsidized for procurement by State Transport Undertakings (STUs). However, despite the expansion of subsidies for electric buses, FAME 3 may exclude subsidies for electric cars, even in commercial operations. Hybrid cars may also be eligible for support under FAME 3, contingent upon adherence to specified price caps.
“Deliberations are underway on whether electric cars need any subsidy in the country,” the official cited above said, adding the current proposal for FAME 3 suggests offering incentives for electric cars priced at less than INR 15 lakh, similar to FAME 2.
Introduction of Fresh Guidelines
With the rollout of FAME 3, the government is poised to introduce updated guidelines to regulate the scheme’s implementation. Companies seeking to avail of benefits under the scheme will be required to undergo re-certification, ensuring compliance with the revised criteria and standards set forth by the government.
Revisions in Incentives under EMPS
Under EMPS, the government provides incentives of up to INR 10,000 per electric two-wheeler and up to INR 50,000 per electric three-wheeler, accompanied by incentives of INR 5,000 per kilowatt-hour (kWh). These incentives, however, represent a reduction from the corresponding figures under FAME 2. EMPS aims to support the sales of approximately 372,215 electric vehicles, comprising electric two-wheelers and three-wheelers. Notably, vehicles equipped with advanced batteries receive incentive benefits to encourage the adoption of cutting-edge technologies.
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