Boosting EV sales: Government in plan to launch FAME- III?

The FAME III subsidy plan is anticipated to be unveiled by the government on February 1, the day of the announcement of the Union Budget of India. To encourage the adoption of EVs, the government offers financial incentives to automakers to promote the production of electric vehicles through the Faster Adoption and Manufacturing of Electric Vehicles in India(FAME) programme.

In order to keep EV prices under control, electric vehicle makers are anticipating that FAME III will be implemented when FAME II expires in March 2024. Manufacturers are now concerned about the availability of subsidies since without them, EV costs would be quite high. Having said that, although FAME II was unveiled in 2019 with a Rs 10,000 crore budget spread over five years, the amount set out for FAME III in the Union budget is still uncertain. 

Subsidies under the FAME III programme will assist in preventing the price of EVs from rising to a point where buyers will find it challenging to afford them. For instance, one of the biggest components raising the total upfront price of an electric vehicle is the cost of batteries.

We anticipate that FAME III will follow the same rules as FAME II. Therefore, the government will keep pressuring OEMs to primarily obtain parts from regional producers and assemble EVs in India.

In the last month of 2023, several initiatives to promote the nation's adoption of EVs have been endorsed by the Parliamentary Standing Committee on Industry. One such initiative was the three-year extension of the FAME-2 (Faster Adoption and Manufacturing of Electric Vehicles) programme. The committee stressed in its report on the promotion of electric vehicles that private four-wheelers and quadricycles should be included in the programme in addition to EV mandates for the public transportation, distribution, and logistics sectors.

So it has to be seen whether the government will introduce a new version of the FAME policy i.e. FAME-III or extend the existing norms of FAME-II.

For those in the market for an EV, the launch of FAME III should be welcome news since other electric two-wheelers, including the upgraded Matter Aera and the Ather Rizta, are anticipated to hit the market this year.