Government Reimburses ₹6,942.32 Crores to EV Manufacturers for Consumer Incentives
The Indian government’s push for a cleaner, greener future is making significant strides through the FAME-India Scheme Phase-II. This initiative, designed to promote the adoption of electric and hybrid vehicles, has resulted in a substantial incentive payout of ₹6,942.32 crores. However, contrary to what one might assume, these incentives are not directly given to electric vehicle (EV) manufacturers. Instead, they are passed on to consumers, making EVs more affordable and accessible.
Under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, the primary focus is to reduce the initial purchase price of EVs for consumers. When a customer buys an electric or hybrid vehicle, they benefit from an upfront reduction in price. This discount, which aims to make eco-friendly vehicles a viable option for more people, is subsequently reimbursed to the original equipment manufacturers (OEMs) by the Government of India.
Minister of State for Steel and Heavy Industries, Bhupathiraju Srinivasa Varma, provided these insights in a written reply to the Rajya Sabha today. He highlighted that the FAME-India Scheme Phase-II is not about providing direct financial aid to manufacturers but rather about supporting consumers. By making EVs and hybrids more affordable at the point of sale, the scheme encourages broader adoption and drives the transition towards sustainable transportation.
The structure of the scheme ensures that the benefits are felt directly by the end-users. Consumers looking to make the switch to electric vehicles are greeted with reduced prices, easing the financial burden and incentivizing their purchase decisions. This method of subsidy distribution is strategic; it not only accelerates the adoption rate of EVs but also indirectly supports manufacturers by boosting their sales.
Since its inception, the FAME-India Scheme has been instrumental in creating a conducive environment for the growth of the electric vehicle market in India. Phase-II of the scheme continues this legacy by addressing the financial barriers faced by consumers. The substantial reimbursement figure of ₹6,942.32 crores underscores the government’s commitment to fostering a sustainable future and reducing the nation’s carbon footprint.
Varma’s announcement in the Rajya Sabha reiterates the government’s dedication to its environmental goals. By focusing on consumer incentives, the FAME-India Scheme Phase-II not only promotes cleaner transportation options but also supports the domestic EV manufacturing industry by enhancing market demand.
As the world grapples with climate change, initiatives like the FAME-India Scheme are crucial in steering economies towards greener alternatives. India’s approach of empowering consumers through financial incentives exemplifies a practical pathway to achieving large-scale environmental benefits. The scheme’s success could serve as a model for other nations aiming to enhance the adoption of electric vehicles and reduce their dependence on fossil fuels.
In summary, the FAME-India Scheme Phase-II stands as a testament to India’s forward-thinking policies in the realm of sustainable transportation. By providing upfront purchase price reductions, the government ensures that the incentives reach the consumers directly, making electric and hybrid vehicles more attractive and accessible. This strategic move not only stimulates the EV market but also paves the way for a cleaner, greener India.
Category-wise subsidy reimbursed to OEMs towards the incentive claimed by them during last five years (01.04.2019 to 31.03.2024) is as under:
| Sl. No. | Segment | Incentive Amount Paid (Rs. in crore) |
| 1 | e-2w | 4,375.59 |
| 2 | e-3w | 845.61 |
| 3 | e-4w | 399.12 |
| 4 | e-buses * | 1,322.00 |
| Total for above | 6,942.32 |
* Subsidy amount released to State Transport Units
