FAME II and State Subsidies: A Guide for Electric Vehicle Buyers

FAME stands for Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles. This scheme was launched in India in 2011 to promote electric vehicles. It was reviewed and revised based on the progress of electric vehicle adoption over the years. The Government of India then announced FAME II, the scheme's second phase, effective from 1 April 2019 to 31 March 2023.

After evaluating its impact, the government extended the FAME II scheme for another year until March 2024. The scheme had a budget of Rs. 10,000 crores for four-wheelers, three-wheelers, and two-wheelers. 

Under this plan, 10 lakh two-wheelers can get a subsidy of Rs. 15,000 per kWh battery capacity. For example, the Ather 450X has a usable battery capacity of 3.7 kWh, which means it can get an incentive of Rs. 55,500. However, the buyers have to avail of the subsidy at the time of purchase and cannot claim it later.

The government has allocated Rs. 5,172 crores for FY 2024 from the total budget to promote electric mobility nationwide. Electric vehicles are more feasible in metro cities with better infrastructure, technology, and demand (due to high fuel prices). However, rural areas need more investment in infrastructure and technology, such as 24-hour electricity supply.

The subsidy is only applicable to two-wheelers that meet the following requirements:

• Can travel at least 80 km on a single charge

• The top speed should be 40 km/h or more

• It needs to be adapted to the local conditions

The central government gives a FAME II subsidy for buying electric vehicles, but some states also offer extra subsidies. The amount varies from state to state, and it is offered depending upon the battery size, or it is fixed for each model. 

The state subsidy is not given at the time of purchase but later. To get it, buyers must provide their Aadhar Card details to the dealer and ensure their phone number and bank account are linked. The subsidy money is then sent to the owner's account.

EV adoption has increased because of the FAME II scheme. But the scheme has limited funds, and the makers will have to look for other ways to reduce the cost of their products at the source.

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