Key Messages

In 2019, the Government of India launched the second phase of the Faster Adoption and Manufacturing of Electric and Hybrid Vehicles (FAME II) scheme to bring electric vehicles (EVs) at par with internal combustion engine (ICE) vehicles in terms of affordability. This was primarily aimed at helping India achieve its climate commitments and EV30@30 goals.

FAME II has been instrumental in fostering the large-scale adoption of E-2Ws in India and if the incentives under the scheme are kept in abeyance for long, the strong growth attained so far in EV adoption could be stifled. The subsidy that OEMs receive from MHI is used to meet their working capital requirements, and if not received on time, it could derail their manufacturing capabilities, which will eventually dampen EV supply in the Indian market. EV OEMs need to comply with the welldefined guidelines and procedures put in place by MHI if they want to make their products more cost competitive by availing subsidies.

An ideal scenario would entail regular dialogues and consultations between industry and government stakeholders, and developing a mutually agreed upon PMP schedule that is both technically feasible and practical. Such a scenario will enable FAME II to continue to make EVs more
affordable, thus boosting EV adoption across the nation.

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FAME Subsidy Withheld: Impact on the Indian EV Sector