FAME Scheme Violation: Government Reinstates Subsidies to EV Makers

The Indian government has begun reinstating subsidies to electric vehicle (EV) manufacturers that have complied with stricter localization rules under the Electric Mobility Promotion Scheme (EMPS) 2024. This move comes after several companies, including Revolt Motors and Greaves Electric Mobility, paid penalties totaling INR 170 crore for violating the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME India) scheme. With an allocated budget of INR 778 crore, the EMPS 2024 aims to support 5.61 lakh electric vehicles and boost the local EV industry.

Compliance and Future Subsidy Approvals

Revolt Motors, a part of RattanIndia, and Greaves Electric Mobility, a subsidiary of Greaves Cotton, have both applied for subsidies under the EMPS 2024. A senior official stated that these companies have agreed to comply with the new localization rules, making them eligible for future sales subsidies. This approval will enable them to offer their electric two-wheelers at more competitive prices.

Penalties and Legal Challenges

The government had issued recovery notices totaling INR 469 crore to six EV manufacturers for flouting FAME scheme rules. Revolt, Greaves, and Amo have paid back around INR 170 crore, while Hero Electric, Okinawa Autotech, and Benling India have contested the claims in court.

EMPS 2024: Enhanced Support for EVs

In March 2024, the Ministry of Heavy Industries announced the EMPS with an initial budget of INR 500 crore to subsidize 3.72 lakh electric two and three-wheelers. In July, the allocation was increased to INR 778 crore to support 5.61 lakh EVs. Official estimates indicate claims of INR 147.32 crore have been raised for the sale of 1.01 lakh EVs from April 1 onwards. Companies like Hero Motocorp, Bajaj, TVS, Ather, Ola, and Kinetic Green have already received approvals to sell vehicles and claim EMPS subsidies.

Evolution of the FAME Scheme

The FAME scheme was first launched in 2015 with a budget of INR 895 crore. FAME II, an expanded version, was introduced in 2019 with a significantly larger budget of INR 10,000 crore. The scheme aimed to promote the sale of locally produced electric vehicles by linking subsidies to a phased manufacturing programme (PMP), which required a gradual increase in localization levels. However, some companies failed to adhere to the PMP while continuing to seek subsidies, undermining the scheme's objectives.

Impact of FAME II

FAME II, which was in effect from 2019 to 2024, successfully supported the sale of nearly 1.4 million electric two-wheelers, 161,000 electric three-wheelers, and 20,556 electric four-wheelers. The program emphasized increasing the localization content in EVs manufactured in India.