KEY HIGHLIGHTS
- 44% reduction from the earlier estimate
- Demand subsidy under FAME instrumental in driving early-stage adoption of electric vehicles
- Full budget for the next financial year is to be presented in July
In the interim budget 2024 announcement, the government has set aside Rs 2,671 crore for the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicle (FAME) scheme for this fiscal year. This marks a significant 44 per cent decrease compared to the earlier budget estimate of Rs 5,172 crore. Also, you can join the 91Wheels WhatsApp Group for all the latest action of the Expo 2024.
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2024 Budget: Will There Be A FAME III Scheme?
Many new-age two-wheeler manufacturers and industry groups are urging the government to extend a subsidy scheme that has significantly boosted the early adoption of electric vehicles in the country.
Despite no mention in the budget speech, Finance Minister Nirmala Sitharaman highlights the government's commitment to support the electric vehicle ecosystem.
While the FAME subsidy decreased, the Production Linked Incentive (PLI) Scheme for Automobiles and Auto Components saw a significant 623 per cent increase, as per the budget estimate document.
Even though there's no clear announcement about extending the current subsidy scheme beyond March 31, the budget allocation for the next year hints that the government plans to keep supporting electric vehicles. We'll get the full budget details in July after the new government forms following the Lok Sabha elections.
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Fame Scheme Budgets Over The Years
In 2015, the government started the FAME scheme, followed by a bigger phase in 2019. FAME I had Rs 895 crore, and FAME II had Rs 10,000 crore until 2022, extended to March 2024 due to COVID-19.
Phase II aimed to support 7,000 e-buses, 5 lakh e-three-wheelers, 55,000 electric cars, and 10 lakh electric two-wheelers. As of Dec 2023, Rs 5,294 crore in subsidies were given to EV makers for 11.80 lakh vehicles. This includes support for around 10.42 lakh two-wheelers, 1,22,690 three-wheelers, and 14,869 four-wheelers under the scheme.
Verdict
The reduction in the FAME subsidy is noteworthy, raising concerns among electric vehicle advocates. However, the surge in the Production Linked Incentive (PLI) Scheme signals a potential positive shift for the EV industry, especially two-wheelers. The government's commitment to the e-vehicle ecosystem remains, although the altered budget allocation brings uncertainties for the sector.
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