FAME-II Electric Vehicle Scheme Ends March 31 as Government Denies Extension

The Ministry of Heavy Industries officially denied extending the FAME-II scheme, stating its end on March 31.

The Ministry of Heavy Industries has officially denied recent speculations of an extension of the Faster Adoption and Manufacturing of Electric Vehicles in India (FAME-II) scheme. The ministry has now confirmed that there are no plans for an extension as yet and that the program will come to an end as scheduled on March 31 or until funds run out.

On March 7, reports suggested that the government was ready to extend the FAME-II policy until July 31, with an outlay of Rs 500 crore. Clearing its stance recently, the ministry has now also dismissed the claims about the extra Rs 500 crores reserved for electric two-wheeler and three-wheeler subsidies.

Moreover, the ministry pointed out that major electric two-wheeler manufacturers, who have been the principal beneficiaries of both FAME I and II initiatives, do not require additional government support.

FAME-II Scheme

The government initiated the FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) Scheme in 2014. The Centre had reserved Rs 895 crore for FAME I for the period between 2015 and 2019.

The FAME 2 scheme, launched in 2019 with a budgetary allocation of Rs 10,000 crore, was originally set for a three-year term but was extended by two years. Its initial goal was to support 7,000 e-buses, 5 lakhs e-3 Wheelers, 55,000 e-passenger cars, and 10 lakhs e-two wheelers.

However, last month, the Ministry of Heavy Industries announced an increase in the programme’s outlay from Rs 10,000 crore to Rs 11,500 crore.

The updated outlay allocated Rs 7,048 crore for electric two-wheelers and three-wheelers, with Rs 4,048 crore set aside for the ‘creation of capital assets.’ Furthermore, the government reserved Rs 400 crore for other specified purposes.

Reports indicate that more than 11,53,079 electric vehicles have received subsidies of Rs. 5,228 crore under the FAME-II scheme.

It is important to highlight that FAME II didn’t only see positive outcomes; it faced scrutiny when numerous electric two-wheeler companies failed to comply with the localization clause.

A government investigation initiated the recovery of wrongly claimed subsidies, which led to the exclusion of seven EV companies from the programme.

FAME-III Proposals

While proposals for FAME-III have been presented, the launch may get postponed due to the upcoming general elections.

There were rumours of a proposed allocation of Rs 8,156 crore for electric 2-wheelers and Rs 4,100 crore for electric 3-wheelers. However, authorities have not confirmed anything yet, and there are speculations that the new scheme may receive approval after the elections.

FAME-I and FAME-II have played a significant role in accelerating the adoption of EVs in India. However, FAME-III may see lower incentives per vehicle, reflecting the intention of the government to discontinue subsidies for specific segments within 2-3 years.