FAME II Subsidy: Government Releases INR 500 Crore in Subsidies for EV

The Indian government has released INR 500 crore in subsidies under the Faster Adoption and Manufacturing of Electric Vehicles (FAME II) scheme to four companies - Ola Electric, Ather, TVS, and Hero MotoCorp.

The FAME II scheme is part of the National Electric Mobility Mission Plan (NEMMP) of Government of India, which aims to promote the sale of electric vehicles across the country by providing a subsidy in the overall cost of the vehicles. The government approved Phase II of the FAME Scheme with an outlay of INR 10,000 crore for a period of three years commencing from 1st April 2019.

FAME II Subsidy Details

Reportedly, Ola Electric is set to receive the highest payout from the Ministry of Heavy Industries, which will be INR 370 crore. Ather will receive around INR 275 crore, while the subsidy bill for Hero MotoCorp will be INR 28 to 30 crore. The remaining amount of INR 288 crore will be released once the companies submit the details of the reimbursements made by them. 

Reports claim, Ather has the highest amount of reimbursement to make, which is around INR 140 crore, whereas Ola has to clear a bill of around INR 130 crore.

Subsidy Allocation Under FAME II

Of the total budgetary support, about 86% of the fund has been allocated for demand incentives to create demand for EVs in the country. The remaining amount is allocated for charging infrastructure, R&D, and administrative expenses.

What Is FAME II Subsidy?

The FAME-2 initiative refers to a scheme introduced in India with a budget allocation of INR 100 billion (US$1.22 billion) aimed at stimulating the adoption of electric vehicles by offering upfront subsidies and developing electric vehicle charging infrastructure.

With an initial budget of INR 100 billion (US$1.22 billion), the FAME-2 India program was established to promote the adoption of electric vehicles (EVs) by offering upfront subsidies and constructing EV charging infrastructure. The program's objective is to encourage the purchase of 1 million electric two-wheelers, 500,000 electric three-wheelers, 55,000 electric cars, and 7,090 electric buses with the aid of subsidies.

Additionally, the program has allocated INR 10 billion (US$122.98 million) for the development of EV charging stations. In 2022, a total of 2,877 EV charging stations were authorized in 68 cities across 25 states and union territories, with 1,576 charging stations sanctioned across nine expressways and 16 highways.

The FAME-2 India scheme was redesigned in June 2021, incorporating lessons learned during the Covid-19 pandemic period and input from industry and users. The revised scheme intends to accelerate the proliferation of EVs by reducing upfront costs. The program has been extended for two years until March 31, 2024.

Issues with FAME Scheme

Previous media reports had revealed that some of the electric vehicle companies were charging customers over and above the INR 1.5 lakh threshold under the central government's FAME scheme for availing the subsidies. The companies had earlier claimed that the additional cost was for additional software features and the off-board charger. However, earlier this month, the electric scooter companies agreed to reimburse the customers who bought EV chargers separately.

The release of INR 500 crore in subsidies to electric vehicle companies is a significant boost to the electric vehicle market in India. It will promote the sale of electric vehicles and encourage more people to switch to clean energy. Additionally, the move will help the Indian government achieve its goal of reducing carbon emissions and promoting a greener and more sustainable economy.