November 28, 2022

The electric vehicle industry in India has been evolving, but at a considerably slower rate than in other countries. On one hand, the manufacturers find it difficult to produce EVs that are powerful and efficient while maintaining profits. Customers on the other hand do not find value in the amount they would have to invest in these vehicles. 

While the manufacturers are leveraging technology and R&D to better their offerings, the government of India is introducing policies and schemes to facilitate both production and consumption.

One such popular scheme in India is the FAME scheme for electric vehicles, launched under the National Electric Mobility Mission Plan, which currently helps EV manufacturers with subsidies, and reduces costs for the customers. Let us have a look at what the FAME scheme is, and how it is benefitting the EV industry in India.

National electric mobility mission plan (NEMMP):

The NEMMP was introduced by the government of India in 2012-13 to help transform the automotive segment in the country. The plan aimed to reach a volume of 6-7 million units of electric vehicles on road by 2020. It is focused on different aspects such as customer incentives to promote buying, facilitate R&D activities to increase industry participation, charging infrastructure, and so on.

The FAME scheme was launched in 2013 to achieve the goals under the NEMMP mission.

The NEMMP was introduced by the government of India in 2012-13 to help transform the automotive segment in the country. The plan aimed to reach a volume of 6-7 million units of electric vehicles on road by 2020. It is focused on different aspects such as customer incentives to promote buying, facilitate R&D activities to increase industry participation, charging infrastructure, and so on.

FAME I scheme for electric vehicles:

FAME stands for Faster Adoption and Manufacturing of (Hybrid) Electric Vehicles in India. The scheme was approved in 2015 with an outlay of INR 795 crore and aimed at boosting both hybrid and electric vehicles. Under this scheme, a subsidy was provided to reduce the final cost for the customers while keeping the revenue intact for the sellers. Promoting research and development in the EV sector, and setting up strong charging infrastructure in the country were also some of the focal points of the first phase of the FAME scheme.

FAME  II for electric vehicles:

The Phase II of the FAME scheme was approved and launched in 2019 with an outlay of INR 10,000 crore. A major chunk of the budget (around 86%) has been allocated for incentives on the demand side so to encourage citizens to buy electric vehicles. For the charging infrastructure in the country, the scheme plans to have around 2,700 charging stations in tier-1 cities, While the initial timeline was for 3 years, the scheme has now been extended till 2024 due to the ongoing pandemic.

What does the discount look like?

As of today, the FAME II scheme offers a discount of INR 10,000 per kWh of battery capacity. For example, the price of the Ather 450X electric scooter is reduced by around INR 43,500 due to the FAME II subsidy. The Tata Nexon EV passenger car can enjoy a price cut up to INR 1.5 Lakh (and an additional state subsidy on top of that).

The FAME scheme for electric vehicles Currently, about half of all the states in India have policies in place to promote the production and use of electric vehicles. We expect the rest of the states to follow the suit too, eventually. Government policies and incentives can act as a catalyst to the EV revolution in India. With more favorable schemes in place, the Indian market can see the day when EVs become mainstream vehicles.

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