Due to the alleged abuse of subsidies by automakers and the announcements of other incentive schemes, India may discontinue FAME-II, one of its flagship incentive schemes for encouraging EV adoption, when it ends in March 2024.
The Economic Times quoted multiple unnamed Indian government officials saying that India is unlikely to extend the FAME-II (Faster Adoption of Manufacturing of Hybrid & Electric Vehicles – second phase) beyond fiscal year 2024 (April 2023 to March 2024).
An unnamed official told The Economic Times that the goal set under the scheme for electric two-wheelers (E2W) and electric buses will be comfortably achieved by the end of fiscal year 2024, adding that from 2024, EV manufacturers can avail their subsidies under other schemes, such as the Production Linked Incentive (PLI) schemes for advanced chemistry cells and for automobiles and auto components.
According to the year-end review of the Ministry of Heavy Industries of India published on December 28, 2022, on the Press Information Bureau of India, 663,000 E2Ws, 70,159 E3Ws, 5,375 E4Ws, and 3,738 e-buses had received incentives till December 6.
However, according to a Business Standard report, India’s Ministry of Heavy Industries was still pushing state governments to place orders for e-buses to meet the target of 7,090 set by the FAME-II, but state governments, such as Tamil Nadu, Rajasthan, Madhya Pradesh, and Punjab, were reluctant due to the fact the price of e-buses is about five times that of diesel buses.
Meanwhile, the ministry is investigating some E2W manufacturers for the abuse of the FAME-II subsidies due to their mispricing of software and chargers and misreporting of local content. The Economic Times reported that automakers, including Hero Electric, Okinawa, and Ampere, are under investigation for misreporting of local content, and Ola Electric, Ather Energy, TVS Motors, and Hero MotoCorp allegedly mispriced their products to avail themselves of the benefits provided by FAME-II.
According to FAME-II, a three-year scheme first announced in April 2019 and extended in 2021 to April 2024, India earmarked INR100 billion (US$1.21 billion) to support 1 million E2Ws, 500,000 E3Ws, 55,000 E4Ws, and 7,090 e-buses, with a local content requirement of 50% for most vehicle categories except for e-buses, which requires local content of 40%.
For E2Ws, the ex-factory price should be under INR150,000 to claim the FAME-II subsidy, and E2W brands in India are trying to sell chargers and software separately to lower the price of vehicles to less than 150,000.
The Economic Times reported that some EV brands in India were asked to meet with government officials to clarify and defend themselves.
Keyword: India may discontinue FAME-II, replace with other EV incentive schemes