Centre Asked To Extend FAME II Scheme Offering Incentives On Purchase Of Electric Vehicles In India

The Federation of Indian Chambers of Commerce & Industry has submitted a proposal to the Ministry of Heavy Industries. FICCI has advocated for the extension of the FAME scheme for the upcoming five years, with a scheduled review at the end of the third year.

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The existing FAME II scheme is set to conclude in March 2024 and FICCI has warned against the abrupt withdrawal or discontinuation of these price incentives that such a move could result in a potential 25% price surge for electric vehicles (EVs). This significant increase may stop the current momentum of EV adoption and it will affect the ongoing investments in the EV sector and jeopardize the progress achieved so far. 

“EV penetration in India is only 5 per cent currently. It is imperative to continue the FAME scheme to achieve critical mass towards reaching overall 30 per cent EV penetration targets by 2030, stated by Government of India and to also help meet 'Panchamrit' / Net Zero climate action goals of India,” FICCI stated.

According to feedback from a diverse group of members involved in the electric vehicle (EV) sector, the FICCI predicts that implementing FAME incentives for the next five years could lead to the adoption of 30.5 million electric vehicles across different categories. This would contribute to reaching the goal of 30% electrification in India's automobile sector. “FAME has emphasized Make in India with its stringent localization norms. Sudden discontinuation of FAME could lead to not only reversal in demand growth but also in investments in EV sector and to Make in India," FICCI emphasised. FICCI mentioned that in the next 3-5 years, as battery prices and the cost of EV components decrease because more people are using them, the need for demand incentives can slowly be reduced and eventually stopped.