The government is likely to allocate up to INR 50,000 crore for promoting green technologies across various segments of the automobile sector, said people aware of a preliminary draft note prepared by the Ministry of Heavy Industries (MHI).
This outlay could either be used for the launch the third phase of the FAME (Faster Adoption and Manufacturing of Hybrid & Electric Vehicles in India) scheme, or incentivising green technologies at the manufacturers’ end or for the vehicle buyers.
“Automakers have made representations and there are consultations underway with them and other stakeholders. We have yet to firm up anything. All options are on the table. FAME-II will come to an end only in March 2024. There’s no hurry. Given that FAME has been running for almost a decade now, we need to deliberate on whether it’s required in the first place,” said a senior government official.
In its present form, the objective of the FAME programme is to make EV purchase more affordable for the buyers through subsidies. Meanwhile, another INR 25,938 crore production-linked incentive scheme aims to boost domestic manufacturing of advanced automotive technology products and attract investments in the automotive manufacturing value chain.
The government launched the FAME subsidy scheme in 2015. If the proposed outlay mentioned in the draft note gets approved, it would be a five-time jump from the INR 10,000 crore assigned for the ongoing second edition.
Confirming the planned outlay, an official at the MHI said: “Presently, this is a concept note. It will go to the cabinet secretary and then be discussed at the PMO (Prime Minister’s Office). The next step will follow once it gets approval.”
If the proposal is approved, two-wheelers are likely to get 42-45% of the total allocation, followed by 25-30% for buses, 8-10% for trucks, and the balance for other vehicles. It would have a portion of funds allocated to new technologies. It would also cover charging infrastructure.
The government has begun working on the third phase of FAME which is likely to cover hydrogen-powered vehicles, offer additional support for electric three-wheelers and a curtailed share for two-wheelers, ET reported in its July 21 edition.
The union government has disbursed INR 4,267 crore on sales of 872,920 units of EVs under the FAME-II scheme, data from the MHI show. Out of the 872,000 units that received incentives, about 775,000 were two-wheelers, followed by three wheelers (87,570) and four-wheelers (9,597).
