Experts expect FAME 3 scheme soon with Rs 10k-20k crore outlay

Bengaluru: Finance Minister Nirmala Sitharaman, in her 2024 Union Budget schemes, announced many measures for many sectors. However, there was no mention of the third iteration of the faster adoption and manufacturing of hybrid and electric vehicles (FAME) scheme.

Before the Union Budget, Minister of Heavy Industries H D Kumaraswamy had revealed that the plans for the FAME 3 scheme were in their final stages and will be implemented. However, when asked about plans to launch FAME 3, Minister of State for Heavy Industries, Srinivas Varma, in a written reply in the Rajya Sabha on Friday, mentioned various schemes in operation to further promote EV adoption but did not address when FAME 3 is forthcoming.

Experts told DH that they expect the government to provide FAME 3 sooner or later.

“For an effective allocation of funds under FAME phase 3, the government should consider an outlay of Rs 10,000-Rs 20,000 crore which aligns with the growing demand and the ambitious targets for electric mobility in India,” said Aryaman Tandon, Managing Partner, Mobility, Energy and Transportation at Praxis Global Alliance.

The FAME subsidy for the existing schemes was halved to Rs 2,671.33 crore in the current fiscal from Rs 4,807.40 crore in FY24. The latest allocation for FAME is only to cover remaining liabilities of FAME 2, which expired in March.

"The absence of any mention of a FAME-3 scheme in the Budget 2024-25 is indeed disappointing for many stakeholders within the industry. However, this silence might hint at a broader, more integrated approach the government might be considering to advance green mobility,” Tandon said.

"We expect the government to provide an outlay of Rs 10,000 crore for FAME 3. However, subsidy per vehicle may go down given the growth in the industry", said Rajat Mahajan, Partner, Consulting, Deloitte India.

The Electric Mobility Promotion Scheme 2024 (EMPS)--- which was supposed to be operational from April 1st to July 31st 2024, with a total outlay of Rs.500 crore-- has been extended by two more months to September 30th, 2024. Moreover, the scheme's outlay is increased to Rs 778 crore.

"If a new FAME scheme were to be introduced, an outlay of Rs 10,000 crore to Rs 15,000 crore would be crucial for ensuring its effectiveness," said Kunal Arya, Founder and Managing Director, ZELIO E-bikes.

The Phase-I of the FAME scheme was launched in 2015 for a four-year period ending on March 31, 2019, with an outlay of Rs 895 crore. Under this scheme, the government supported 2.8 lakh EVs with total demand incentives of Rs 359 crore, Rs 280 crore in incentives for 425 electric and hybrid buses, Rs 43 crore for setting up 520 charging stations, and Rs 158 crore for institutions such as IIT Madras and IIT Kanpur, among others.

The Government notified Phase-II of the FAME Scheme for a five-year period starting from April 1, 2019, with a total outlay of Rs 11,500 crore. Under this scheme, as of July 31, EV manufacturers have made claims worth Rs 6,825 crore for 16.7 lakh vehicles.

Furthermore, three Oil Marketing Companies (OMCs) were sanctioned Rs 800 crore as capital subsidy for establishing 7,432 electric vehicle public charging stations, of which Rs 560 crore has already been disbursed; and Rs 73 crore for upgrading 980 public fast-charging stations.