For the electric vehicle (EV) industry, the Centre has extended the Faster Adoption and Manufacturing of Electric Vehicles (FAME-II) scheme.
The scheme, which was supposed to end on March 31, 2024, has been extended until July 31, 2024, by four months.
Business Standard reported that the goal of this extension is to avoid any interruptions in the EV industry. The government has set aside an extra Rs 500 crore as part of the extension to pay for demand incentives for electric two-wheelers (e2W) and electric three-wheelers (e3W).
It is anticipated that this financial assistance would ease the burden on EV producers and promote the use of electric cars.
The Expenditure Finance Panel has suggested Rs. 10,000 crore for the future FAME-III initiative. Once the outlay for FAME-III is approved, the allocated Rs. 500 crore will be adjusted. However, FAME-III is expected to be approved following the forthcoming elections.
The extension is a relief for EV firms who were having difficulty fulfilling the initial deadline. To sell off their inventory by the March 31 deadline, a few manufacturers, like Ola Electric and Bounce Infinity, had to resort to hefty discounts.
The FAME-II plan was launched in 2019 with a three-year budget outlay of Rs 10,000 crore and with the goal of promoting the use of electric cars.
The goals were to finance 5 lakh electric three-wheelers, 10 lakh electric two-wheelers, 55,000 electric passenger vehicles, and 7,000 electric buses.
As of December 21, 2023, Rs 5,422 crore has been spent on the initiative, which has subsidised 12,16,380 automobiles in total.
In the meantime, sales of e2W in India rose by over 24 percent. Data from the Vahan site shows that Year-on-Year (YoY) sales increased to 81,963 units in February 2024 and exceeded 800,000 units during the 11 months of FY24.
India’s EV two-wheeler registrations peaked in May 2023 at 1,04,055 units, up from 66,053 units in February 2023. According to the Vahan website, registrations have decreased to about 45,000 units after the FAME-II subsidy decreased in June.
FAME II is intended to address environmental issues, particularly lowering pollution. By encouraging the use of renewable energy sources for transport, and contributing to larger initiatives, the goal is to promote more sustainable and eco-friendly transportation options in the country.
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