EV companies seek stability in incentives ahead of FAME-III rollout

Bengaluru: With expectations of the union budget unveiling the third edition of the government scheme to promote adoption of electric vehicles, sections of EV makers said this time they wanted a subsidy policy with a definite timeline, rather than one that would be abruptly cut off like the previous one.

"New changes are too sudden, especially for the automobile industry with its long lead times. We would want the new subsidy regime to last for at least two to three years to truly benefit the industry," Amitabh Saran, chief executive of electric three-wheeler maker Altigreen, told ET.

The Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme was originally launched in 2015 to encourage the adoption of electric and hybrid vehicles. Under it, a subsidy was provided to EV makers who used it to lower the prices of their products. The second edition, FAME-II, was introduced in 2019 and went on till March 2024 when it was scrapped. There has since been a steep slowdown in EV sales, according to a report by the Federation of Automobile Dealers Associations.

India's EV sector still needed subsidies to survive, said Saran. "Today, around 21% of cargo vehicles and 9-10% of passenger vehicles are electric. The market will need around two to three more years to come to a point where it can survive without subsidies," he added.

The government in March introduced the Electric Mobility Promotion Scheme (EMPS) to help boost the adoption of electric two-wheelers and three-wheelers and support the development of an EV manufacturing ecosystem in the country. However, subsidy under the new scheme was effectively half that of FAME-II.