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FAME 3 scheme might include hybrid cars as well this time around

The third edition of electric vehicle incentive scheme, FAME (Faster Adoption and Manufacturing of Electric Vehicles), is set for a rollout soon. With an outlay of approximately Rs. 10,000 crores, FAME 3 will primarily target electric two-wheelers, three-wheelers and government owned buses. The decision to include electric cars, particularly for institutional buyers like taxi aggregators, remains undecided.

his new edition is expected to closely mirror the FAME 2 scheme, which lapsed in March 2024. FAME 2 had previously provided a 15% subsidy on the sale price of electric scooters in India.

FAME 3 is intended to continue the efforts of the Electric Mobility Promotion Scheme (EMPS), a temporary measure introduced following the conclusion of FAME 2. With a total allocation of Rs. 500 crores, EMPS supports the sales of electric two-wheelers and three-wheelers for four months until July. Under EMPS, the government offers incentives up to Rs. 10,000 per electric two-wheeler and up to Rs. 50,000 per electric three-wheeler, both categories receiving incentives of Rs. 5000 per kWh.

The FAME scheme, initially launched to boost local manufacturing and sales of electric vehicles by providing demand incentives to customers, requires fresh certification for all companies seeking incentives under FAME 3. According to the proposal, FAME 3 will be valid for a two-year period, contrasting the five-year span of FAME 2.

The new scheme aims to increase the number of subsidised electric buses purchased by State Transport Undertakings. Under FAME 2, the government had incentivised the purchase of 7000 electric buses, a figure expected to rise under FAME 3.

However, FAME 3 is likely to exclude subsidies for electric cars, even for commercial purposes. Deliberations are underway on whether electric cars need any subsidy in the country. The current proposal suggests offering incentives for electric cars priced below Rs. 15 lakhs, similar to FAME 2. Hybrid cars may also receive support, subject to the same price cap if passenger cars are included in the scheme.

The government is also bringing in fresh guidelines in the new scheme and companies seeking to avail benefits would have to seek re-certification. EMPS aims to support the sales of 3,72,215 electric vehicles, including 3,33,387 electric two-wheelers and 38,828 three-wheelers, by extending incentives to vehicles equipped with advanced batteries.

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