EMPS 2024: Government announces shock-absorbing subsidy scheme after FAME-II

After announcing the conclusion of the Faster Adoption and Manufacturing Electric Vehicles-Phase-II (FAME-II) subsidy, the government of India has rolled out the Electric Mobility Promotion Scheme (EMPS), 2024 to encourage the sale of electric two-wheelers (e2W) and three-wheelers (e3W) across the nation. 

The new scheme planned to run for four months, has been given a Rs 500 crore allocation by the Centre, according to Heavy Industries Minister Mahendra Nath Pandey.

On April 1, the new programme is scheduled to launch, replacing the existing FAME-II programme.

The new programme demonstrates the government's efforts to advance electric transportation and meet Net Zero goals. Over four months, the allotted Rs 500 crore would be used to assist about 400,000 e2W and e3W, according to Pandey.

In response to growing demand and to decrease the financial strain on electric vehicle manufacturers, the government of India has reduced the maximum subsidy threshold for e2W vehicles from Rs 22,500 to Rs 10,000, and for e3W vehicles from Rs 111,505 to Rs 50,000. Both e2W and e3W will have incentives of Rs 5,000 per kilowatt-hour (kWh).

"The increased demand is the reason for the reduction in the subsidy amount. The aim is to support the sector and get it ready for life beyond subsidies,” the minister stated.

Every EV player who wants to be eligible for the incentives under the new programme will need to re-register. In the upcoming days, the ministry intends to release the EMPS guidelines.

Even though the government is providing incentives for the e2W and e3W categories, the new plan will not provide any incentives of this kind for e4W and e-buses.

Several e4W participants, notably the market leader Tata Motors, have appealed this decision, arguing that FAME-II should be extended for the category by an additional three years.

According to government sources, the existence of current schemes such as Auto PLI and PM-eBus Sewa plan is the reason e4W and e-buses categories are not included in the next plan.

"For e4W and buses, the Auto PLI and PM-eBus Sewa Scheme are already in place.” The minister stated that the EMPS will now only focus on the e2W and e3W categories.

In the past, the Department of Heavy Industry(DHI )launched the FAME-I scheme with an outlay of Rs.895 crore from 1st April 2015 to 31st March 2019. Following the scheme, DHI rolled out FAME-II with an outlay of 10,000 crore which was later increased to Rs 11,200 crore for the period of 1st April 2019- 31st March 2024. Now, in  EMPS 2024, it is to be observed that with the lower budget allocation, the government intends to further promote the spirit of the free market meanwhile, absorbing any shock generated by the conclusion of FAME-II. 

Since road transport is a state subject, the EMPS scheme also intends to promote the state government's efforts to provide financial incentives. “States need to offer a bouquet of fiscal and non-fiscal incentives. Some such incentives may include waiver / concessional road tax, exemption from permit, waiver / concessional toll tax, waiver /concessional parking fees, concessional registration charges, etc, ” the notification by the central government reads.

Despite the reduction of subsidies and changes in regulations, sales of electric vehicles (EVs) have increased significantly this year by more than 45% thus far. In comparison to the little over 1 million EV registrations from the previous year, the total for 2023 is just shy of 1.5 million. Due to all of this, the nation's total EV penetration has surpassed 5% and currently standing at 6.3% as opposed to 4.8% in 2022.