New Delhi: The Electric Vehicle Promotion Scheme (EMPS), which was slated to end by July 31, has been extended by two months. It will now have a nearly 50% increase in corpus and revised targets for the number of electric two and three wheelers the government will support by offering purchase subsidies. A statement from the Ministry of Heavy Industries this evening said that the EMPS scheme was originally set to run from April one to July 31, with a total outlay of INR 500 crore. “The scheme has been extended by two more months i.e. upto September 30. Additionally, the scheme’s outlay has been enhanced to INR 778 crore.”
What the statement did not say was that the government was likely compelled to extend the EMPS due to the absence of a consensus on the contours of a third edition of the purchase subsidy scheme for electric vehicles, called FAME (Faster Adoption and Manufacturing of Electric and Hybrid Vehicles). The second edition of FAME ended on March 31 and EMPS was always intended as a short term, stop gap scheme before a likely third edition of FAME was brought back.
The back and forth over FAME III comes as many eyebrows had been raised when the electric vehicle (EV) sector drew a blank in the Union Budget for 2024-25, with no direct announcements on continuation of purchase subsidies or other benefits for promoting green tech. The FAME scheme has been a long standing indicator of the government’s intent to promote EVs and it has supported lakhs of electric two and three wheelers by lowering the cost of acquisition of these vehicles. ETAuto had reported earlier this week that the deliberations of the ministry of heavy industries with all stakeholders were ongoing about FAME III and if no consensus was reached, the government may be compelled to extend the Electric Vehicle Promotion Scheme (EMPS) beyond July 31.
The extended EMPS has enhanced targets too: it will now support 560,789 electric vehicles in all – 500,080 electric two-wheelers (e-2Ws) and 60,709 electric three-wheelers (e-3Ws). This includes 13,590 rickshaws and e-carts, as well as 47,119 e-3Ws in the L5 category.
FAME II:
The second edition of FAME – Faster Adoption and Manufacturing of Hybrid and Electric Vehicles – was launched in 2019. In the five years till March 31, 2024, the initial corpus of the scheme was INR 10,000 crore but was enhanced to INR 11500 crore later. The scheme subsidised 11.7 lakh e2ws (higher than the scheme’s initial target of supporting 10 lakh e2ws), 4600 electric buses against a target of seven thousand ebuses and 1.3 lakh electric three wheelers which is just about a fourth of the target at five lakh vehicles.
In various pre-Budget discussions with industry representatives, officials of the ministry of heavy industries (the administrative ministry for FAME II) have said that subsidising e2ws sales may no longer be a policy priority and instead, ebuses and etrucks may see a push in the coming months.
A person close to developments had said earlier this week that the third edition of the FAME scheme, which will continue to offer subsidies for EVs, is in the works but has not been approved by the Prime Minister’s Office yet. This person said that the new edition of FAME will likely include etrucks for the first time and the budgetary outlay for it may be similar to FAME II.
EMPS Woes:
Multiple people aware of developments in the e2w segment – the intended primary beneficiary of EMPS – have said that the subsidy roll out under this scheme has not been adequate because the portal on which OEMs had to register did not start functioning till a few weeks back. Also, many erstwhile e2w OEMs were not able to register for becoming eligible for subsidy (some have been blacklisted due to alleged subsidy misappropriation earlier). One industry insider said that registrations have now started and the OEMs expect the subsidies to start coming in by next month. The eligible OEMs are probably relieved at the extension of the EMPS tenure, since e2ws are unlikely to get any meaningful subsidies in FAME III.
