EV Subsidy Scheme: PM E-Drive To Replace FAME-III, Announcement Likely Today

The Union Cabinet is likely to approve 'PM E-Drive scheme', instead of FAME-III, to incentivise the sale of electric vehicles, people familiar with the matter told NDTV India.

The approval is expected to be accorded in the Cabinet meeting to be chaired by Prime Minister Narendra Modi at 5 p.m. on Wednesday, the person quoted above said on the condition of anonymity.

Under the scheme, an overall subsidy to the tune of Rs 11,000 crore would be rolled out to push the sale of EVs, the person said.

FAME-II or the second version of ‘Faster Adoption and Manufacturing of (Hybrid) Electric Vehicles in India’, which had an outlay of Rs 11,500 crore, lasted for a five-year period ending March 2024. The scheme had cumulatively subsidised the sale of 13.21 lakh EVs between fiscals 2020 and 2024.

NDTV Profit had, on Sept. 2, reported that India was likely to announce the third iteration of the successful EV subsidy scheme by mid-September.

The Electric Mobility Promotion Scheme, with a budgetary allocation of Rs 500 crore, replaced FAME-II in April. Although it was expected to end in July, the government extended its tenure to September-end and increased the outlay to Rs 778 crore.

The maximum subsidies rolled out under EMPS were nearly half as compared to the subsidies provided under the FAME-II scheme. This resulted in a dip in EV sales.

In March 2024—the final month when FAME-II benefits were available—EV sales had peaked to 2,13,036 units. The same plunged to 1,15,850 units in April 2024, when the scheme was replaced with EMPS, as per the data available on the government's Vahan website.

The monthly sales stood at 1,56,199 EVs in August, which was higher 22.8% year-on-year but lower as compared to the peak scaled in March.

Notably, the subsidy scheme remains key for the government's aim to boost adoption of EVs in the country. The government has set a target to increase the share of EVs to 30% of the overall vehicles sold by 2030.