FAME 3 Subsidy For EVs Confirmed; To Be Implemented By September 2024

The subsidies under the FAME 3 scheme will be more or less similar to that of the FAME 2 scheme

In an exciting development in the EV world, to further push the sale of electric bikes and electric scooters, the third edition of the Faster Adoption and Manufacturing of Electric Vehicles Scheme has been confirmed, and is set to be announced soon, according to a senior government official who spoke to The Economic Times. 

Once the election results are announced on June 6 and the new government is formed, the proposed scheme will then be sent to the government for approval. The plan is to roll out the scheme within the first 100 days of the new government coming into power, so expect it to be rolled out by September 2024.

Further details about the FAME 3 scheme include an outlay of Rs 10,000 crore for electric two-wheelers, three-wheelers and government-owned buses. All electric bike and electric scooter brands seeking incentives under the FAME 3 scheme will have to apply for fresh certification and the scheme will be valid for a two-year sales period, instead of the 5-year sales period of the FAME 2 scheme (which ended on March 31, 2024). Also, the FAME 3 scheme will be similar to the FAME 2 scheme which offered a subsidy of Rs 10,000/kWh of battery capacity with an upper cap of 15% on the ex-factory price of the vehicle. 

Ahead of FAME 2’s end on March 31, the central government announced the Electric Mobility Promotion Scheme 2024 (EMPS 2024) by mid-March 2024 as a temporary solution to cushion the possible negative impact on sales. The scheme came into effect from April 1, 2024 onwards and will end on July 31, 2024. Under this scheme, a subsidy of Rs 5,000/kWh of battery capacity is being offered with the upper cap being the same as that of FAME 2 scheme (15% of ex-factory price). But, EMPS 2024 also has an additional capping of Rs 10,000 per EV (compared to Rs 22,500 under FAME 2).   

As a result, the subsidy under EMPS 2024 was lesser than that of FAME 2, so the prices of electric two-wheelers did go up post March 2024 but not by a very big margin. For example, prices of electric scooters from Ather Energy and TVS were increased from April, 2024 onwards. Electric two-wheeler sales for the month of April 2024 did take a hit from the previous month but not as much as it would’ve without the support of any subsidy. 

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FAME 2 subsidy has had a huge impact on the rapid adoption of electric two-wheelers in India over the past few years and the EMPS 2024 scheme did offer a good stop-gap solution till the government finalized a new scheme for the next few years. And the proposal of the FAME 3 scheme to be implemented in the next few months will be welcome news for EV makers like Ather Energy and Ola Electric, who are reliant on subsidies to sell their vehicles. This will also give them sufficient time to figure out how to be less dependent on subsidies and prepare for the eventual reality of when subsidies will no longer be available. More importantly, at least as far as the near future is concerned, electric bikes and electric scooter prices will witness a drop as the proposed FAME 3 subsidy will ensure greater savings than the current EMPS.

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