A source familiar with the matter mentioned that the third edition of the FAME scheme is currently being developed, though it has yet to receive approval from the Prime Minister’s Office. This upcoming edition is expected to introduce subsidies for electric trucks for the first time and may have a budget similar to that of the scheme’s second edition, which concluded on March 31 this year.
The EV sector did not receive any direct financial support or announcements regarding subsidies to promote green technology in the Union Budget for 2024-25. Despite hints from Heavy Industries Minister H D Kumaraswamy at a recent industry event that there would be no new purchase subsidy scheme announced for electric vehicles in the Budget, the industry remained hopeful for initiatives that would boost EV sector growth.
A source familiar with the developments mentioned that the third edition of the FAME scheme is being planned. This next phase will continue to offer subsidies for electric vehicles but has not yet received approval from the Prime Minister’s Office. The new edition is expected to include electric trucks for the first time and might maintain a similar budgetary allocation to the second edition, which concluded on March 31 of this year.
It was also mentioned that if FAME III is not introduced by the end of the month, the government might extend the Electric Mobility Promotion Scheme (EMPS), a short-term initiative valid from April 1 to July 31, for a few more months. The Ministry of Heavy Industries, however, has declined to comment on this matter.
Meanwhile, Rajat Mahajan of Deloitte India highlighted that while the Budget did not address direct benefits to the automotive sector, it left room for potential future relaxations from the Finance Ministry or the GST Council concerning FAME III subsidies and other direct benefits for EV/NEV.
An EV industry leader noted that there are no clear indications yet regarding the timeline for FAME III, although government officials have indicated its forthcoming introduction.
Since the conclusion of FAME II on March 31, which supported a significant number of electric two-wheelers, buses, and three-wheelers, the government launched EMPS with a reduced subsidy framework for some vehicle categories. Industry representatives hope this scheme will be extended if FAME III does not materialize by the end of the month.
In terms of indirect benefits, Mahajan pointed out several measures, such as the exemption of critical minerals like Lithium from customs duty and maintaining unchanged duties for battery cells and manufacturing machinery. These measures are anticipated to encourage localization and support the energy transition, alongside proposals to remove basic customs duties on ferro nickel and blister copper, which could help reduce input costs for vehicle and battery manufacturing.
