The Indian government has taken a decisive step to fortify the Faster Adoption and Manufacturing of Electric Vehicles in India (FAME-II) program by allocating an additional Rs. 1,500 crore for its second phase. This move responds to concerns that the initially allocated funds might be insufficient before the program’s deadline in March 2024, given the robust sales of electric vehicles (EVs).
The Department of Expenditure (DoE) thoroughly reviewed the proposal to increase FAME-II’s outlay from Rs. 10,000 crore to Rs. 11,500 crore. The Ministry of Heavy Industries (MHI) confirmed that this financial boost aligns with the program’s objectives. The MHI had already allocated Rs. 5,127 crore for the current fiscal year, marking the highest amount since the program’s inception in 2019.
Anticipating a surge in EV sales, particularly electric two-wheelers (e2Ws), the ministry expedited fund allocation for the ongoing fiscal year. To ensure the program’s sustainability until its deadline, two key measures were implemented: a reduction in the maximum subsidy for e2Ws from around Rs. 60,000 to approximately Rs. 22,500 starting June 1, 2023, and a request for an additional Rs. 1,500 crore from the finance ministry.
The government’s addition of extra funds has elevated its vehicle support objectives for all categories except buses, with a 56% increase to 1.74 million units. Notably, the targets for e2Ws, e3Ws, and e4Ws have seen significant increases. Industry players welcomed the commitment to innovation and sustainability, considering each financial allocation a catalyst for the EV industry. However, some expressed concerns about the adequacy of the funds, suggesting that Rs. 1,500 crore might not be enough to meet the escalating demand in the EV market.
With electric vehicle sales consistently surpassing one million units for two consecutive years, there are expectations that e2W sales alone will exceed one million in 2023. Despite concerns about fraudulent activities, FAME-II has successfully propelled EV penetration, leading to ongoing discussions about the mandatory nature of the forthcoming phase within the Ministry of Finance and the Prime Minister’s Office.