
The Ministry of Heavy Industries (MoHI) is embarking on a significant overhaul of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) Phase-II scheme, with plans to increase E-2W (electric two-wheeler) allocation by a substantial 165%. This restructuring initiative also includes a request for an additional INR 1,500 crore in support from the finance ministry. Let’s delve into the details of this transformation and its implications for the Indian electric vehicle (EV) industry.
Revamping Funding Distribution
Under the revamped scheme, the allocation of funds will witness notable shifts. Two-wheelers will see a considerable boost in fund allotment, while three-wheelers will experience a reduction. Similarly, four-wheelers will receive a slightly higher allocation, but the funding for buses will be lower compared to the current levels.
Background: FAME-II Scheme
The FAME-II scheme was initially launched in 2019 with a total budget of INR 10,000 crore for a three-year period. However, recognizing its significance, the scheme was extended for an additional two years, until March 31, 2024. This initiative is designed to promote and incentivize electric mobility across both public and commercial sectors.
Electric three-wheelers, four-wheelers, and buses, whether public or privately owned, are eligible for incentives under this scheme. Notably, electric two-wheelers also enjoy the benefits of these incentives, provided they are privately owned and registered.
Impact on the Electric Vehicle Industry
Earlier this year, the electric two-wheeler industry experienced a significant shake-up following a revision in FAME-II incentives. This revision led to price increases for several prominent E-2W models. However, starting from July, there has been a steady revival in sales on a month-on-month basis.
Recent VAHAN data for the period of January to September 2023 reveals that two-wheelers accounted for an impressive 57% of total EVs sold in the country. This was followed by three-wheelers at 37% and passenger vehicles at around 5%. In a remarkable achievement, India’s total EV sales crossed the one million mark in less than nine months in CY2023, a milestone previously attained only in full-year CY2022.
For the fiscal year 2023-24, the Ministry of Heavy Industries has secured an allocation of INR 5,172 crore, marking the highest funding allocation since the launch of the FAME-II scheme four years ago.