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Extension of FAME scheme will help push sales of electric vehicles, say experts

The FAME scheme, started in 2019 for promoting sales of electric vehicles, was supposed to end by 2022. Photo: MintPremium
The FAME scheme, started in 2019 for promoting sales of electric vehicles, was supposed to end by 2022. Photo: Mint

  • The Union government’s decision to extend the second phase of the FAME scheme by two years will help push EV sales especially in the two and three-wheeler segment in the coming years, said industry executives and analysts
  • Continuation of FAME II scheme will help the industry in capturing the deferred demand for electric vehicles

The Union government’s decision to extend the second phase of the Faster Adoption and Manufacturing of Hybrid and Electric vehicle (FAME) scheme by two years to 31 March 2024, will help push sales of electric vehicles, especially in the two and three-wheeler segment, in the coming years, said industry executives and analysts.

The Union government on Friday announced its decision to extend the second phase of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme by two years to March 31, 2024. The scheme, started in 2019 for promoting sales of electric vehicles, was supposed to end by 2022.

"In line with its clear policy to encourage EV adoption, the government has extended the FAME II policy by 2 years. This, coupled with recent changes in incentive structure and introduction of EV policies by select states, will enable faster penetration of EVs, especially two-wheelers and three-wheelers," said Shamsher Dewan, vice president and group head, corporate sector ratings, ICRA.

Earlier this month, the Union government increased incentives on electric two-wheelers to help boost broad-based adoption. According to a section of experts, this was a desperate move by the government to utilize the funds earmarked for the FAME scheme, with the sale of EVs remaining muted for the past two years.

The ministry of heavy industries and public enterprises announced a 50% increase in incentives for electric two-wheelers to 15,000 per kilowatt hour from 10,000 per kWh. According to the new rules, the cap on incentives will be limited to 40% of the total price compared to the earlier cap of 20%. The ministry of heavy industries has also mandated Energy Efficiency Services Ltd (EESL) to procure 300,000 electric three-wheelers for use by different authorities.

The public sector unit has been given the responsibility to procure electric buses for deploying across cities.

“Continuation of FAME II scheme will help the industry in capturing the deferred demand for electric vehicles (EV), with the support of the scheme. The demand for EV was severely affected due to pandemic and industry was really looking forward to the extension of FAME II scheme by few more years so that the amount allocated under the scheme could be deployed to accelerate demand for electric vehicles," said Sulajja Firodia Motwani, chairperson, FICCI Electric Vehicle Committee.


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