2024 Annual Budget: FAME-III Might Not Be Announced On July 23

Amidst all the chatter about the upcoming Faster Adoption and Manufacturing of Electric Vehicles (FAME) subsidy scheme, the latest comes from Union Minister, HD Kumaraswamy. He states that the upcoming FAME-III subsidy scheme is still in its final stages, and will not be ready by July 23, the date when the upcoming Union Budget will be announced. 

This might create a vacant period in between for what would happen to the prices of EVs once the Electric Mobility Promotion Scheme (EMPS) 2024 expires on July 31. Whether the OEMs keep the ex-showroom prices of the products affordable from their own pockets, or whether the Government extends the EMPS 2024 scheme for a while – remains to be seen. 

(Also Read: EV Sales Decline After FAME-II Scheme Ends)

Why The Delay?

FAME-III will be slightly different from FAME-II. It will be more focused on the way subsidies guide the sales and increased adoption of electric vehicles. It will start with an aggressive localisation of public and private bus fleets. The FAME-III subsidy is expected to replace all 8 lakh diesel buses with electric buses distributed among STUs private operators, and school & employee transportation by 2030.

Coupled with the sudden boom of vehicles running on alternative fuels like CNG, where Bajaj crescendoed this trend by launching the world’s first CNG bike with the Freedom 125. Four-wheeler manufacturers have also offered their fair share of partial hybrids and fully hybrid vehicles. This change in market positioning has made it all the more detrimental for the minister to effectively apply the next subsidy scheme. 

FAME-II Was An Eye Opener

2023 saw several electric two-wheeler manufacturers like Hero Electric, Ampere, and Okinawa Autotech, flouting norms by equipping its scooters with materials sourced from outside and yet applying for subsidies. This is bound to make the Government more cautious with how it proceeds with the eligibility criteria for subsidies, which is expected to receive slight modifications. However, the current rate of ₹ 10,000 subsidy per vehicle available under the EMPS scheme, is expected to continue with FAME-III. 

All In All...

The FAME-III subsidy scheme was earlier reported would have a budget outlay of ₹10,000 crore, based on the in-principle approval that the MHI received from the Finance Ministry. Additionally, it is also expected to have three proposals that need consideration, each of which talks about subsidies amounting from ₹12,600 crore to ₹30,000 crore, all of which will now take all the more time to decide, due to the default nature of all coalition governments. However, the Prime Minister will be the one to take the final call.