Finance Ministry boosts the FAME-II scheme with an additional Rs 1,500 crore

In a strategic move to further propel the adoption of electric vehicles (EVs) in India, the Union Finance Ministry has greenlit an additional allocation of Rs. 1,500 crore for the second phase of the Faster Adoption and Manufacture of Electric Vehicles (FAME-II) program. This decision comes as a response to concerns that the existing funds might fall short before the scheme’s conclusion in March 2024, given the robust surge in EV sales.

The Department of Expenditure (DoE) approved on 2 January 2024, to a proposal aiming to augment the FAME-II budget from Rs. 10,000 crore to Rs. 11,500 crore. The increased allocation aligns with the scheme’s core objective of promoting electric vehicles. As of 26 December 2023, the government had already utilized Rs. 8,948 crore from the initially allocated Rs. 10,000 crore.

According to an order from the Department of Expenditure (DoE), it was conveyed that the department approved the proposal for an increase in the budget allocation under FAME India Phase II from Rs. 10,000 crore to Rs. 11,500 crore until 31 March 2024.

The additional funds will be instrumental in elevating the government’s support goals for all vehicle categories, except buses. The revised targets include a surge in support for the number of vehicles, rising from 1.56 million to 1.74 million. Notably, the support target for electric two-wheelers (e2Ws) has been amplified by 50% to 1.55 million, while the goal for electric three-wheelers (e3Ws) witnessed a reduction of 68% to 155,536. Electric four-wheelers (e4Ws) saw a 13% reduction to 30,461, while the target for buses increased to 7,262 units from 7,090.

In 2023, EV sales experienced a remarkable upswing of over 45%, defying subsidy cuts and regulatory shifts. The total EV registration figure for 2023 surpassed 1.5 million units, a substantial increase from 2022’s slightly over 1 million. The EV penetration rate in the country rose to 6.3% in 2023, up from 4.8% in 2022.

The surge in EV adoption marks the country’s consecutive year with EV sales exceeding one million. Industry experts expect that in 2024, sales of electric two-wheelers alone will surpass the one million mark.

As the government remains committed to fostering the EV ecosystem, discussions about the mandatory nature of the upcoming phase of the scheme are underway within the Ministry of Finance and the Prime Minister’s Office. The move to inject additional funds into FAME-II reflects a proactive stance to support the thriving electric vehicle market in India.