A parliamentary committee on electric vehicles (EVs) has recommended that phase II of the Ministry of Heavy Industries’ Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme for providing vehicle manufacturers with subsidies be extended.
The Committee on Estimates stated in its 26th report on the ‘Evaluation of Electric Vehicle (EV) Policy’ that it is concerned about significant price increases for EVs if government subsidies are removed.
“The Committee discovers that a large number of startups are also involved in this field, and that they may be forced to close down once the scheme is closed. As a result, it will be detrimental to the long-term growth that EVs can achieve in the Indian market,” the report stated.
As a result, the panel recommended that the Centre extend the FAME-II scheme’s current deadline of March 31, 2024 by two years to allow more time to evaluate the scheme’s effectiveness and make necessary adjustments/modifications to promote EVs.
The FAME scheme’s second phase was initially launched in 2019 for a three-year period. It was later extended for two more years until FY24, with a total outlay of INR 10,000 Cr. Subsidies will be provided to 5 lakh electric three-wheelers, 10 lakh electric two-wheelers, 7,000 ebuses, and 55,000 electric four-wheeler passenger cars under the scheme.
The scheme had supported 8.8 lakh EVs as of February 2023. In contrast, the government has used only INR 1,217 Cr in FY23 until February, out of a total allocation of INR 2,903 Cr for the year.
Prior to the release of the Union Budget 2023, the EV industry advocated for the extension of the FAME-II scheme beyond FY24. However, no such announcement was made by the government.
Furthermore, the Ministry of Heavy Industries (MHI) is unlikely to extend the scheme beyond its current deadline, according to reports.