Industry has approached the government for extending the FAME II scheme beyond FY24.
The likely shift comes as the ministry of heavy industries, which administers FAME, has launched an investigation into the alleged misappropriation of subsidies under the scheme by two-wheeler EV makers, said the people cited above. It has halted the release of subsidies in some cases.
Under FAME, companies can offer a discount of up to 40% on the cost of locally manufactured vehicles and claim it as subsidy from the government. The investigations are focused on the claimed local content.
“We are unlikely to extend the scheme beyond FY24,” a senior government official said, adding that key FAME II goals will be achieved by then. FAME II aims to support 1 million EV two-wheelers (E2W) and 7,000 electric buses (e-buses). About 800,000 E2Ws and 3,500 e-buses are likely to be on the road by the end of March this year.
“The balance E2W and e-buses goals will be comfortably achieved by the end of 2023-24,” the official told ET. However, FAME II targets for electric three- and four-wheelers are unlikely to be attained, he said.
“The Centre’s focus is not on personal mobility through electric four-wheelers but on public transport buses and cheaper E2Ws for masses. The three-wheeler market is already growing at present price points,” he said.Under the PLI scheme, benefits will be accrued at the manufacturers’ end. This will be through PLI programmes covering advanced chemistry cell (ACC) battery storage, automobiles, and auto components, the official said. In FAME II, the subsidy is disbursed at the point of sale of the vehicles.
“The PLI support for ACC, automobile, and auto component industry will start getting disbursed from FY24 and gain momentum in subsequent years. These will make manufacturing costs of all vehicles, including EVs, cheaper in the country,” the official said.
The Centre has earmarked Rs 25,938 crore under the PLI programme for automobiles and auto components. As many as 115 companies have filed applications under this segment of the PLI scheme, which was notified in September 2021.
Out of these, five auto original equipment manufacturers (OEMs) had applied for both parts of the scheme. In all, the PLI programme has been successful in attracting proposed investments in manufacturing automobiles and components of Rs 74,850 crore, of which Rs 45,016 crore is from approved applicants under the Champion OEM Incentive Scheme.
For batteries, the Centre has allocated Rs 18,100 crore. The goal of this programme is to establish a manufacturing capacity of 50 gigawatt hours (GWh) of advanced chemistry cells (ACCs) for enhancing India’s manufacturing capabilities.
