EV subsidy scheme EMPS to be extended until FAME III is implemented, says heavy industries minister Kumaraswamy

New Delhi: Union heavy industries minister H D Kumaraswamy reiterated that the third phase of the Faster Adoption and Manufacturing of Electric (and Hybrid) vehicles - FAME-III - may be announced in two months, reassuring the country’s electric vehicle makers that subsidies would continue to be provided for the growth of the sector.

Until the new flagship programme is notified, subsidies for green energy-powered vehicles will continue through the government's Electric Mobility Promotion Scheme (EMPS), which will be extended by another two months, Kumaraswamy said on the sidelines of the Automotive Components Manufacturers Association (ACMA) convention in the national capital on Monday.

"We are discussing it," Kumaraswamy said. “Till FAME-III is announced, we will extend the EMPS for another two months… We are trying to remove all the loopholes found in FAME II.”

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FAME-II ended in March and the EMPS was introduced in its place to stay until the implementation of FAME-III. While the EMPS was expected to lapse in July, the central government extended it till the end of September with an extra outlay of ₹778 crore.

Under FAME and EMPS, consumers can buy an EV at a discounted price from manufacturers. The government reimburses manufacturers by paying the difference. These subsidies are crucial for the growth of the EV market in the country and incentivise consumers to adopt vehicles powered by green energy sources.

Data shows that purchases of EVs are dwindling. Since 2018, only 5.28% of two-wheelers sold in India were electric models, while 1.99% of four-wheelers sold were electric, according to data from the heavy industries ministry in August 2023.

PLI schemes

Sales of three-wheeler e-rickshaws declined almost 21% year-on-year in the quarter ended June, according to the Society of Indian Automobile Manufacturers (SIAM). The government’s Vaahan dashboard also showed a 16% year-on-year drop in EV sales in August. The government wants 30% of vehicle sales in India to be EVs by 2030.

Kumaraswamy said last week that FAME-III would be rolled out in one-to-two months after getting approved by the Union government. A day later, Union minister of road transport and highways Nitin Gadkari said there was no need for subsidies for EVs because they would achieve price parity with petrol and diesel-run vehicles in two years.

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However, Kumaraswamy reiterated the government's push for EV subsidies in his address to representatives of the automotive components industry, highlighting his ministry's work to increase EV adoption, including its subsidy schemes and production-linked incentives for auto and automotive components (PLI-Auto) and advanced battery cells (PLI-ACC). PLI-Auto announced in 2021 had an outlay of about ₹25,000 crore, and PLI-ACC had an outlay of ₹18,100 crore.

Recently, the heavy industries ministry granted ₹3,620 crore worth of benefits to Reliance Industries Ltd to set up 10 GWh (gigawatt-hours) of battery manufacturing capacity under the PLI scheme for advanced chemistry cells.

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