Finance Minister Nirmala Sitharaman presented the interim Budget 2024 on Thursday and going against the expectations of the auto sector, the financial documents revealed that the government has reduced the allocation for the FAME scheme for FY25. For the upcoming 2024-25 fiscal year, the government earmarked Rs 2,671.33 crore, lower by more than 44 cent against the revised Budget Estimates for the 2023-24 fiscal year towards the Faster Adoption and Manufacturing of Hybrid and Electric Vehicle in India (FAME) scheme.
This development comes when there is no clarity as to whether the government will add another extension to the existing FAME II scheme, which was already extended by two years. Further, against industry expectations, it seems unclear if the government has any plans as of now to declare a new FAME III scheme, reported PTI.
As per the Expenditure Budget document, revealed today, the FAME scheme has been allotted Rs 2,671.33 crore for the upcoming fiscal year beginning April 1, 2024. Comparatively, the allocation for the initiative stood at Rs 5,171.97 crore in 2023-24 fiscal year, with the revised estimates projecting the figure near Rs 4,807.4 crore.
Reacting to the Budget announcement, Rohan Shravan, Founder and CEO, Tresa Motors, said, “Tresa Motors commends the Interim Budget 2024 for taking strides towards a greener future. While these initiatives are impactful, we believe the budget could have further fuelled India’s economic engine by considering additional measures. Targeted incentives for local battery production and recycling facilities would bolster supply chain resilience and create valuable jobs. Additionally, extending FAME-II subsidies beyond two-wheelers to include commercial EVs would significantly accelerate their adoption, promoting cleaner logistics and reducing carbon footprint.”
This reduction also follows a decrease in the subsidy on two-wheelers, announced last year, amid allegations that seven electric two-wheeler firms failed to comply with the localisation norms needed to be eligible for the subsidies. The government cut the incentive for the industry from Rs 15,000 per kWh of battery to Rs 10,000 per kWh, effective from June 1, 2023.
The current FAME II scheme expires on March 31, 2023, with a budget outlay of Rs 10,000 crore. The scheme essentially provides upfront incentives for purchasing electric and hybrid vehicles and aims to increase the charging station infrastructure in the country. Launched in April 2015, the FAME scheme forms the umbrella programme initiated by the government to boost electric and hybrid vehicles in India. The first phase of the scheme continued till 2019 and the second phase concludes in March 2024.
Also Read : Budget 2024: Govt To Boost EV Ecosystem, Increase Adoption Of E-Buses In Public Transportation
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