Government EV Push: The Details

The government's Faster Adoption and Manufacturing of Electric Vehicles II (FAME II) scheme concluded yesterday, March 31st, 2024, after disbursing substantial subsidies totaling Rs 11,500 crore to electric vehicle manufacturers and consumers.

Launched in 2019 with a budget of Rs 10,000 crore (later increased by Rs 1,500 crore), FAME II aimed to promote the adoption of 7,000 e-buses, 5 lakh e-3 wheelers, 55,000 e-passenger cars, and 10 lakh e-two wheelers. As of March 30th, it had subsidized 15,42,452 electric vehicles across 221 eligible models, with Tata Motors and Ola emerging as the top beneficiaries in their respective segments.

While the scheme's entire allocated budget was utilized in the initial three years, a marginal decline was observed in 2022-23, followed by a substantial gap in 2023-24. The Interim Budget for the current fiscal year 2024-25 has allocated Rs 2,671.33 crore for the upcoming FAME III scheme, marking a 44% reduction from the previous year's allocation of Rs 5,171.97 crore.

Alongside FAME II, the government sanctioned 6,862 e-buses for intra-city operations and 2,877 EV charging stations across 68 cities, although only around 150 of these charging stations have been constructed and operationalized thus far.

As FAME II concluded yesterday, the government has introduced the Electric Mobility Promotion Scheme 2024, with an outlay of Rs 500 crore, to subsidize the adoption and manufacturing of e-2-wheelers and e-3-wheelers.

To attract global EV manufacturers, a policy announced on March 15th, 2024, permits limited imports of cars at reduced customs duties, with the condition of establishing manufacturing facilities in India within three years and achieving a localization level of 50% within five years.

The electric vehicle industry and the Ministry of Heavy Industries are advocating for a higher allocation and an extension of the subsidy scheme in the main budget, scheduled for July 2024, with a focus on public electric transportation and charging infrastructure expansion. The new government is expected to consider these recommendations and allocate a more substantial fund for accelerating the adoption of electric vehicles.