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FAME 3 Subsidy: When will it launch, what can we expect?

The FAME II scheme ended on 31 March 2024, now, the government is most likely to introduce the FAME III scheme this year in the July Union Budget session. The subsidies of the FAME scheme have boosted the industry of EVs in India. With the expectation of an extension of the FAME scheme, many wonder about the FAME 3 subsidies.

FAME 3 Subsidy 

The second phase of the FAME India Scheme concluded on 31 March 2024 after the scheme had been effective by the government since 2019 for three years. The electric Vehicles industry is expecting the introduction of the third phase of the FAME India scheme. 

The Finance Minister of India, Nirmala Sitharaman, has mentioned the FAME III scheme in the interim budget speech. According to the statement, the Indian government will be entitled ₹2671 crore for the implementation and execution of the FAME III scheme. 

The Faster Adoption and Manufacturing of Electric Vehicles (FAME) subsidies have helped the manufacturers and contributed to the development of the EV ecosystem in India. The demand for the FAME India scheme extended phases is due to conditions and provisions that favor the EV industries and the incentives linked to products in the scheme.

Scheme  Faster Adoption and Manufacturing of Electric Vehicles (FAME) Scheme
Phase Completed Phase I (2015 to 2019) and Phase II (2019-2024)
Expected Phase  FAME III
Expected Launch  July 2024
Budgetary Support  ₹2671 crore
Regulation Body  Ministry of Heavy Industries, Indian Government

When can you expect the FAME III scheme announcement from the government? 

Detailed information about the third phase of the FAME India Scheme is not announced officially. According to the reports, the government will unveil the detailed FAME III scheme after the parliamentary elections are finished. 

The new government is likely to announce the FAME III scheme in the upcoming July 2024 Union Budget session. 

FAME 3 Subsidy 

Impact of the FAME India Scheme 

 According to reports, the government has provided around Rs 11,500 crore in subsidies under the FAME II scheme. 

Phase I and II of the FAME scheme have accelerated the growth and adoption of EVs in the Indian households and automobile industries. Fame I provided the first push to the EVs in India supporting around 278,000 EVs in the country. However, the first phase was criticized for using batteries and products that could harm the environment. 

The second phase of the FAME addressed the issue and boosted the slow growth of the industry through incentives for electric buses, 3-Ws, and 2-Ws, and improving the technical and safety standards of EVs. 

In the FAME II scheme, the cost parity in the 2-Ws and 3-Ws Electric vehicles accelerated the adoption of the vehicle in India. 

The biggest beneficiary of the FAME II scheme, TATA Motors, manufactures the biggest number of 4-Ws and 3-Ws EVs, and electric buses along with MG Motor India and Mahindra.

What can you expect from the upcoming FAME III scheme?

We know the initial budgetary support of ₹2671 Cr was entitled to the FAME III scheme, which is less compared to the previous budgetary support for the FAME II scheme, almost 44% of the budget for the year 2023-24. 

The EV industry and the stakeholders expect the government to increase the budget allocation to ₹10000 to ₹11000 crores for the FAME III scheme to boost up the industry in the July Budget session. 

The GOI’s support in promoting and implementing the EVs industry in India has been outstanding. Recently, the government has limited the imports of Electric cars into the country to attract global manufacturers and encourage them to build their manufacturing units in India. 

Apart from these, the beneficiaries can expect the following benefits through the scheme:

  • In the third phase of the FAME India Scheme, the government can focus more on the manufacturing and adoption of electric buses and trucks.
  • According to reports, the government can lower the subsidies of the 2-Ws electric vehicles and electric cars.
  • The government can put more focus on the development of electric vehicle charging infrastructure as despite the efforts and growth of the EV industry, it’s a concerning matter for manufacturers as well as consumers. 
  • The government can improve the incentive transfer mechanism in the FAME India scheme. The incentives are issued when OEMs submit their incentive claims. The OEMs find this problematic due to late subsidy payments that cause a shortage in the working capital of OEMs. 

The challenges faced in the FAME II scheme will most likely be addressed in the upcoming phase of the FAME Scheme. We expect changes in the scheme that would focus more on the localization of the EVs in the country. 

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