Govt Boosts FAME-II With INR 1,500 Crore Post Surge In EV Sales

The Union Finance Ministry has approved an additional allocation of INR 1,500 crore for the second phase of the Faster Adoption and Manufacturing of Electric Vehicles in India (FAME-II) program. This move aims to address concerns that the funds might run out before the scheme's conclusion in March 2024 due to the robust sales of electric vehicles (EVs).

On January 2, the Department of Expenditure (DoE) greenlit a proposal to increase the FAME-II outlay from INR 10,000 crore to INR 11,500 crore. The decision was made considering the program's objectives to promote EV adoption. As of December 26, the government had utilized INR 8,948 crore of the initially allocated INR 10,000 crore for the scheme.

The DoE order stated, "This Department (DoE) conveys its approval for the proposal seeking enhancement in the budget allocation under FAME India Phase II from INR 10,000 crore to INR 11,500 crore until March 31, 2024."

The introduction of additional funds has prompted an upward revision of vehicle support targets for all categories except buses. The revised target for supported vehicles has been increased from 1.56 million to 1.74 million. Specifically, the target for electric two-wheelers (e2Ws) has surged by 50 per cent to 1.55 million, while the target for electric three-wheelers (e3Ws) has decreased by 68 per cent to 155,536. The target for electric four-wheelers (e4W) has been reduced by 13 per cent to 30,461, and the bus target has been raised to 7,262 units from 7,090.

EV Penetration Rate Increases

Despite subsidy cuts and regulatory shifts, EV sales in 2023 have experienced a strong growth of over 45 per cent. The total EV registrations in 2023 reached 1.5 million units, significantly surpassing the previous year's figure of just over 1 million. The EV penetration rate in the country increased to 6.3 per cent in 2023 compared to 4.8 per cent in 2022.

India has witnessed EV sales exceeding one million units for two consecutive years, and industry expectations for 2024 suggest that sales of e2Ws alone will surpass the one-million mark. The government is actively involved in shaping the upcoming phase of the scheme, with discussions on its mandatory nature taking place within the Ministry of Finance and the Prime Minister's Office.

Delhi Tops EV Sales

Meanwhile, Delhi Finance Minister Kailash Gahlot announced that the national capital had accomplished a milestone by recording massive sales of electric vehicles (EVs), which accounted for 19.5 per cent of total vehicle sales in December last year.

Over recent years, the Delhi government has actively promoted eco-friendly transportation alternatives through a range of initiatives. These include the Delhi Motor Vehicles Aggregator and Delivery Service Provider policy, the Premium Bus Aggregator policy, and the ongoing Electric Vehicle Policy.