Government's FAME Scheme to be Replaced by PM E-Drive Scheme

The Indian government is expected to replace the FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) subsidy scheme with a new programme called the PM E-Drive Scheme. (Source: CNBC)

Budget and Subsidies for PM E-Drive Scheme

The PM E-Drive Scheme is projected to have a financial outlay of Rs 10,900 crore. Within this new framework:

• Rs 3,679 crore in subsidies will be allocated to incentivize electric vehicles (EVs) under FAME III.
• An additional Rs 500 crore will be earmarked specifically for electric ambulances.

Scope of FAME III

Under FAME III, the scheme will support:

• 24.79 lakh electric two-wheelers
• 3.16 lakh electric three-wheelers
• Over 14,000 e-buses

It is important to note that electric cars for private or shared mobility will not be covered under this scheme, according to sources.

Announcement Expected Soon

Heavy Industries Minister HD Kumaraswamy revealed that an official announcement regarding FAME III is anticipated later today. He made the statement during an event organized by the auto dealers' association FADA.

Transition from FAME-II to PM E-Drive Scheme

The Electric Mobility Promotion Scheme (EMPS), with a budget of Rs 500 crore, replaced FAME-II in April 2024. Initially set to end in July, the government extended its tenure until September and increased the outlay to Rs 778 crore.

However, the subsidies provided under EMPS were approximately half of those under FAME-II, which led to a notable decline in EV sales. In March 2024, the final month of FAME-II benefits, EV sales peaked at 2,13,036 units, whereas sales dropped to 1,15,850 units in April 2024 when EMPS came into effect.

EV Sales Trends

Despite the initial dip, sales began to recover with 1,56,199 EVs sold in August 2024, marking a 22.8% year-on-year growth. However, sales have not yet returned to the levels seen during the FAME-II period.

Government's EV Adoption Targets

The subsidy scheme is vital for the government's ambition to accelerate the adoption of electric vehicles in India. The government has set a goal to increase the share of EVs to 30% of overall vehicle sales by 2030.