FAME scheme rejig boosts funds for e-Bus, e-Bike segments

New Delhi: The Centre has raised the funding support for electric buses and two-wheelers but slashed the subsidy for three-wheelers as part of a major rejig of the ₹10,000-crore electric vehicle (EV) incentive scheme.

Budgetary allocation for electric three-wheelers under the Faster Adoption and Manufacturing of Electric Vehicles (FAME) II scheme will be used to support adoption of electric buses and two-wheelers.

A senior government official told ET that another ₹800 crore will be used for subsidising electric buses under FAME, taking total allocation closer to ₹4,300 crore. The budgetary allocation for electric two-wheelers has also been enhanced to around ₹3,500 crore, but the subsidy per unit has been reduced to facilitate support for a larger number of vehicles.

"Around 1,600 more e-buses will now be supported by the FAME II scheme," said the official.

More for Electric 2-Wheeler Makers
"In all, around 9,000 e-buses will get the subsidy," said the official cited above, adding that about 2,600 e-buses have already been delivered under the FAME scheme till now.

These decisions were taken at a meeting of the Programme Implementation and Sanctioning Committee of FAME India held last week.

Under the reworked scheme, the subsidy for electric two-wheelers was cut to 15% of the ex-factory price, from 40%, to spread the incentive across a larger number of vehicles. This will mean more expensive e-bikes for end consumers, but manufacturers will get support for higher production.

These changes seek to fast-track adoption of electric vehicles. The government has hiked the allocation for the two categories that are perceived to have the highest impact socially as well as environmentally in curbing vehicular pollution.

FAME II initially aimed to incentivise the purchase of 7,000 buses, 55,000 passenger cars, half a million three-wheelers and one million two-wheelers with electric powertrains.

"The FAME scheme anyway had a provision of fungibility, and funds lying idle are best utilised in the segment where the growth can be accelerated," an industry source said. "Without the Rs 1,500 crore, the electric two-wheeler subsidies can entirely dry out in next few months, making the bikes costlier by up to Rs 60,000 a unit."