Plans For Phase-III Of FAME Start, With Bigger, Wider Coverage

FAME-III set for rollout. Photo by-Freemufilms/Freepik

Even as the secoonf phase of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) is likely to wind down this year, speculation is rising on the shape of the next phase of the scheme that was brought in to support EV transition. Administered by the Ministry of Heavy Industries (MHI),  FAME-I(Rs 895 crores)  and FAME-II which had an allocation of Rs 10,000 crores, can be considered qualified successes, having helped achieve considerable progress in adoption as well as a manufacturing base for EVs in India. The MHI is now working to formulate the new provisions of FAME-III. It is estimated that the ministry will likely allocate the highest grant for the scheme’s third phase, which is meant to boost electric mobility in the country.

The MHI is reportedly considering an allocation of Rs 26,400 crore for the sector, the highest ever allocated to the scheme. The Government initially notified Phase II of the FAME India Scheme for 5 years w.e.f. 01st April 2019, with a total budgetary support of Rs. 10,000 crores. 

As per the government plan, the highest allocation will be made to the electric bus segment, which can get around Rs 9,600 crore, whereas the electric two-wheeler segment can get around Rs 8,158 crore. On the other hand, the electric three-wheelers segment can get around Rs 4,100 crore under the proposed FAME-III scheme, a report indicated.  This seems to be in consonance with announcements that have made it clear that the focus will be on public transportation. Even at state levels, subsidies are expected to be focused more on public transport gradually. 

When the Ministry of Heavy Industries (MHI) formulated the FAME Scheme in 2015 to promote the adoption of electric/ hybrid vehicles (EVs) in India, Phase I of the scheme was available up to 31st March 2019 with a budget outlay of Rs 895 Crore. This phase of the FAME India Scheme had four focus areas, i.e., technological development, demand generation, pilot project, and charging infrastructure components. 

“In the 1st phase of the scheme, about 2.8 lakh xEVs were supported with total demand incentives of Rs. 359 Crore (Approx). In addition, 425 electric and hybrid buses, as sanctioned under the scheme’s first phase, are deployed across various cities in the country with a Government Incentive of about Rs. 280 Crore. The Ministry of Heavy Industries also sanctioned about 520 Charging Stations/ Infrastructure for Rs. 43 Crore (approx.) under Phase-I of FAME India Scheme,” Krishan Pal Gurjar, Minister of State for MHI, recently told the Parliament in December last year. 

Under Phase-II of the FAME India Scheme, a subsidy amounting to Rs. 5356 crore has been given to electric vehicle manufacturers on the sale of 11,96,203 no. of electric vehicles as of 15.12.2023. Further, MHI sanctioned 6862 electric buses to various cities/STUs/State Govt. entities for intracity operations. Out of 6862 e-buses, 3487 e-buses have been supplied to STUs as of 29th November, 2023. In recent weeks, indications have been given that the subsidies on two wheelers and private cars might be phased out, as the government expects market forces to work from here on. The focus in 2023 was clearly on supporting a charging network, that is expected to remove misgivings among many buyers about opting for electric.

Hybrid vehicles continue to remain outside the purview as on date, and will probably remain so, going by indications. These have been touted by manufacturers as a better option than pure electric in a country where 70% of the power in the grid still comes from thermal power.

An interesting new category that might yet get support will be electric vehicles used in rural India and in farming in particular,be it tractors or other relevant vehicles.