With just two months left for the critical FAME 2 incentive scheme to expire, a senior government official has assured that the benefits will continue beyond March 2024, a development which will come as a relief for the electric two and three-wheeler makers, who have benefited from the sops to offer their vehicles at a much more accessible ticket price for electric vehicles.
“The government must assist the industry and encourage consumers to switch to zero-emission modes of transportation, so the demand incentives of the FAME scheme are likely to continue,” said Dr. Hanif Qureshi, Additional Secretary, Ministry of Heavy Industries.
Speaking exclusively to Autocar Professional at the sidelines of the ARAI Symposium on International Automotive Technology (SIAT) 2024 in Pune, he said that FAME 3 will be implemented after FAME 2 expires in March 2024.
The Additional Secretary indicated that the FAME 3 program may not be as huge, but will undoubtedly have a budget, which will also push for electric trucks as part of the government’s effort to decarbonise large fleets that use traditional fuel sources.
The fact that FAME 3 will ‘undoubtedly be introduced in the upcoming Union Budget 2024 by Finance Minister FM Sitharaman,’ was also confirmed by a senior government official who stated that “the FAME 3 scheme will carry on the guidelines of FAME 2, but will include certain measures that will improve the ease of doing business for OEMs, component makers, and other auto industry members.”
The FAME II scheme, with an outlay of Rs 10,000 crore, was initially rolled for three years ending in 2022 but was later extended till March 2024.
The scheme is targeted to support one million registered two-wheelers, apart from three-wheelers, four-wheelers, and buses, with 86 percent of funds being allocated for demand incentives.
In June, the government slashed the subsidy for electric two-wheelers under the scheme by Rs 5,000 to Rs 10,000 per kWh and reduced the cap on incentives for two-wheelers to 15% of the ex-factory price of vehicles from 40%.
The subsidy was reduced after the funds envisaged for the two-wheeler segment were exhausted. The government had also revised the scheme outlay for electric two-wheelers to Rs 3,500 crore from Rs 2,000 crore to continue the subsidy.
While addressing the attendees at the show, Additional Secretary Qureshi also highlighted the necessity for testing agencies to speed up the process of awarding the eligibility certificates to enterprises that have been awarded under the government’s PLI auto scheme.
The Union Cabinet authorised the PLI-Auto Scheme on September 15, 2021, with a financial outlay of Rs 25,938 crore for five years, from FY2022-23 to FY2026-27, which has been extended by one year to FY27-28.
PLI in auto and components scheme aims to boost manufacturing of Advanced Automotive Technology (AAT) products, promote deep localisation for AAT products, and enable the creation of a domestic and global supply chain for Zero Emission Vehicles (ZEVs), i.e. battery electric vehicles and hydrogen fuel cell vehicles.
More than three OEMs, including Mahindra & Mahindra, Tata Motors, and Ola Electric, have already secured eligibility certifications for incentives under the vehicle PLI scheme.
Additional Secretary Qureshi stated that 23 other applicants have submitted their applications, which are currently in various stages, and they will be given the eligibility certificates in the coming weeks.
The government is exploring promoting electrification of goods, including the planned FAME initiative to encourage intercity electric buses and small and medium-sized trucks used by fleet operators.
“This will cut emissions from large-scale transportation using conventional fuel as they move towards electrification” he indicated.
