New EV subsidy scheme under FAME III won't feature in Budget 2024, says minister

The Centre is yet to decide on its new EV subsidy policy under Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) III yet. The subsidy scheme, which is aimed to promote electric vehicle sales in India, had expired in March as the Centre announced an enhanced outlay of outlay to benefit EV buyers. The new EV subsidy scheme under the FAME III regulations is still under discussion and is unlikely to feature during the Union Budget 2024 to be held on July 23. Union Minister HD Kumaraswamy said the FAME III is likely to be implemented in the near future.

The FAME EV subsidy scheme was first launched back in 2015. It was replaced by the FAME II scheme two years later. The scheme, which lapsed on March 31 this year, has been offering subsidies on electric vehicles sold in India since 2019. In the first phase of the scheme, the Centre had allotted ₹529 crore, while in the second phase the amount used to offer subsidy was ₹10,000 crore for a period of three years. Earlier this year, the Centre had said that EV subsidies under FAME II will be eligible for electric vehicles sold till March 31 or till the time funds lasted. The government had also increased the outlay of the EV subsidy scheme by up to ₹11,500 crore.

FAME III EV subsidy scheme in final stages

During an event held by Society of Indian Automobile Manufacturers (SIAM) today, the Union Minister said that the FAME III scheme is yet to be finalised and is unlikely to be announced during the upcoming Budget Session. He said, “Already preparatory work is going on. All the several ministries have recommended how to implement the FAME III programme. In future, some months or some future days it is going to be implemented. It is in the final stages." Finance Minister Nirmala Sitharaman had allocated ₹2,671.33 crore for the EV subsidy scheme during the Interim Budget.

No tax sop on hybrid cars proposed yet

The Union Minister also said that no decision has been taken yet on reducing tax on hybrid vehicles. Currently, electric vehicles (EVs) in India are taxed at only 5 per cent, whereas hybrids are taxed as high as 43 per cent, just below the 48 per cent tax imposed on petrol cars. Union Minister Nitin Gadkari had earlier argued that EVs are currently taxed at five per cent while the tax on hybrid cars is as much as 48 per cent, and hence it needs to be rationalised to promote climate-friendly vehicles to address climate change and decrease air pollution.

Check out Upcoming EV Cars in India, Upcoming EV Bikes in India.