Till now, the central government has been subsidizing electric vehicles to encourage the use of electric vehicles in India. This subsidy was given under the scheme called FAME (Faster Adoption and Manufacturing of Electric vehicles). The FAME scheme was in effect from 2015 to 2019 and the FAME 2 scheme from 2019 to March 2024. Following this, it was expected that announcements about the FAME 3 project would be made in yesterday’s budget. However, no announcement has been made about it.
EMPS Scheme:
After the completion of the FAME 2 project last March, the central government had announced a temporary scheme called EMPS (Electric Mobility Promotion Scheme) for subsidizing electric vehicles till July 31. A fund of Rs 500 crore was earmarked for this project in the interim budget presented in February this year. As this project is about to end on July 31, it is questionable whether it will continue.
What did the Minister of Heavy Industries say?
Meanwhile, Union Heavy Industries Minister Kumaraswamy announced the FAME 3 project a few days before the budget was presented. He said that the FAME 3 project has reached its final stage and the Prime Minister’s Office has not yet approved it. Further, he said that the notification for the new FAME 3 scheme will be released soon, and the currently temporary EMPS scheme will be extended for a few months.
The electric vehicle sector will indirectly benefit from the budget:
The budget tabled yesterday did not make any direct announcement regarding the subsidy for electric vehicles. However, the electric vehicle industry has some indirect benefits.
A key component for electric vehicles is the battery. The central government has removed import duty on lithium, cobalt and copper, the raw materials required to make the battery. This will reduce the production cost of batteries for electric vehicles by up to 20%.
The most expensive part of an electric vehicle is the battery. 40% to 50% of the total cost of an electric vehicle is for the battery. Now, with this major announcement, the overall price of electric vehicles is likely to come down.
Funds allocated in the Interim Budget for FAME 2 Project:
There was no announcement on the FAME 2 scheme in yesterday’s budget. However, in the interim budget presented in February, the central government had allocated Rs 2,671 crore under the FAME 2 scheme.
This has created a kind of confusing situation. Will electric vehicles sold after 31st July get subsidy? If available under which scheme? It has raised various questions like It is expected that the central government will give an explanation about this soon.
