On July 23, when the NDA government led by PM Narendra Modi 3.0 was presenting its budget in the House, the auto sector had high expectations. Although the Union Finance Minister did not give any direct benefits for the auto sector, he definitely gave relief to EV manufacturing by reducing the custom duty on minerals like lithium. Meanwhile, the industry was also expecting an extension of the FAME scheme to encourage electric vehicles, but no announcement regarding this was made in the budget speech.
But now the Central Government has announced to extend the deadline of the existing Electric Mobility Promotion Scheme (EMPS) to 2024. The government has extended this scheme by two months to promote green mobility and electric vehicle manufacturing ecosystem across the country. That means, both vehicle manufacturers and customers will be able to avail the benefits of this scheme till 30 September 2024.
Extension of EMPS Scheme:
Let us tell you that the EMPS scheme was implemented from April 1 this year after the end of FAME-2. This scheme was implemented for 3 months which was to end on 31st July. Under this scheme, a budget of Rs 500 crore was allocated to promote electric mobility. But now this scheme has been extended by 2 months and its budget has been increased to Rs 769.65 crore.
Under this scheme, 5,60,789 electric vehicles will get financial assistance. Which will include 5,00,080 units of electric two-wheelers and other electric three-wheelers, like e-rickshaws etc.
How much subsidy on electric two-wheeler:
The government says that this scheme has limited funds. A subsidy of Rs 5,000 will be given for each kilowatt hour (kWh) of battery capacity in the subsidized electric two-wheeler allocated in EMPS 2024. At present, most of the electric two-wheelers or scooters in the Indian market are provided with a battery of up to 2 kW. In this regard, customers will be able to avail subsidy of up to Rs 10,000 on the purchase of each scooter. However, the maximum subsidy for electric two-wheelers has also been limited to Rs 10,000. That means, even if the battery pack is larger than 2kWh, the maximum subsidy will be only Rs 10,000.
What’s the report on FAME III:
As part of the National Electric Mobility Mission Plan (NEMMP), the Department of Heavy Industry launched a scheme named FAME India in 2015 to promote the technology and manufacturing of electric and hybrid vehicles. It was implemented from 1 April 2015 and is known as FAME Scheme. Under this, electric vehicle manufacturers get subsidy, the direct benefit of which was given to the common customers while purchasing the vehicle. But there is no discussion right now about implementing the third phase of FAME after extending the EMPS scheme.
First phase of FAME:
The first phase of this scheme was started from 1 April 2015, whose time limit was 2 years. However, in view of the increasing inclination of people towards electric vehicles in the country, it was extended from time to time and the last extension was given till 31 March 2019. The first phase of the Fame India scheme mainly focused on four areas which included demand creation, technology platform, pilot project and charging infrastructure. The aim of demand creation was to encourage electric 2-wheeler, 3-wheeler, 4-wheeler as well as light commercial vehicles and electric buses. During Phase One, a total fund of Rs 529 crore was allotted in different years till the year 2019.
Second phase of FAME:
After the success of the first phase, the government launched the FAME-2 scheme for 3 years with an outlay of Rs 10,000 crore across the country from 1 April 2019. About 86 percent of the total budget of the Phase 2 scheme was allocated to increase the demand for electric vehicles. The objective of this phase was to support 7000 electric buses, 5 lakh electric 3 wheelers, 55,000 electric 4 wheeler passenger cars (including strong hybrids) and 10 lakh electric 2 wheelers. However, with time it got extended and it was extended till March 2024.