Govt reduces budget allocation to FAME subsidy by 44% to Rs 2,671 crore for FY25

Budget -2024-2 -Infra

The central government has reduced the budget allocation for the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicle (FAME) scheme by nearly 44 percent to Rs 2,671 crore for FY25, which may result in a slowdown in the adoption of electric vehicles in India.

In FY24, the government allocated a revised estimate of nearly Rs 4,807 crore for FAME schemes, according to the government’s budget allocation document published on February 1st.

The FAME India Scheme is a government subsidy scheme under the National Electric Mobility Mission Plan (NEMMP) and stands for Faster Adoption and Manufacturing of Electric Vehicles in India.

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The Ministry of Heavy Industries was allocated a budget of Rs 5,127 crore for the last financial year, marking the highest allocation since the inception of the Rs 10,000-crore FAME scheme in 2019.

The electric vehicle (EV) two-wheeler industry was pinning hopes on a strong push for green mobility through EV incentives like the Fame III scheme and more capex allocation for research and development and charging infra for EVs.

While the FAME Subsidy has decreased, the Production Linked Incentive (PLI) Scheme for Automobiles and Auto Components has increased by a whopping 623 percent, according to the budget estimate document.
This move is likely to benefit EV's two-wheeler industry as well.

To be sure, Ola Electric, last week said it has received a domestic value addition certificate under the production-linked incentive scheme for the automobile and auto component industry.

There was no mention FAME III scheme in the budget 2024 speech, however, the Finance Minister said that the government will push for EV manufacturing and the development of charging infra

“As India moves towards its net zero emission target by 2070, the Government will work towards expanding and strengthening the EV ecosystem as well as develop the charging infrastructure," said Finance Minister Nirmala Sitharaman while delivering the Interim Union Budget 2024 speech on February 1.

The Government will also be transitioning most of the public transport, such as buses, to EVs.

"Our govt will expand the e-vehicles and will push for greater adoption of electric public transports like buses with formal payment mechanism," Sitharaman said.