The Ministry of Heavy Industries (MHI) has enhanced the budgetary outlay of the Faster Adoption and Manufacturing of Hybrid & Electric Vehicles (FAME-II) program from ₹100 billion (~$1.20 billion) to ₹115 billion (~$1.38 billion) to encourage India’s transition to clean mobility.

The subsidies for demand incentive will be eligible for electric two-, three-, and four-wheelers sold until March 31, 2024.

As per the revised outlay, subsidies amounting to ₹70 billion ($843 million) have been allocated for electric vehicles. Electric two-wheelers have been allotted ₹53 billion ($638 million), electric three-wheelers ₹9.8 billion ($118 million), and electric four-wheelers ₹7.5 billion ($90.35 million). The allocation for electric buses is ₹32 billion ($385 million).

Further, ₹40.4 billion ($468.6 million) has been earmarked for grants that will fund the creation of capital assets. For the development of EV charging infrastructure,₹8.3 billion ($99.9 million) has been allotted.

The FAME program, which came into force in 2019, supports the electrification of public and shared transportation in addition to offering concessions for EV manufacturers and users.

Last March, a parliamentary committee recommended that the FAME program be extended by two years beyond the current March 31, 2024 deadline, as it felt that the removal of government subsidies for EVs would make the vehicles expensive.

The committee also called for a national policy on EVs that should offer demand- and supply-side incentives such as reduced GST, waiver of road tax and registration fees, and a discounted hire-purchase program with lower interest rates by financial institutions.

As of December 31, 2023, subsidies amounting to ₹52.28 billion (~$627 million) have been extended to EV manufacturers on the sale of ~1.15 million vehicles.

With 1.53 million units being sold in India in 2023, EV sales saw a 50% year-over-year jump. EVs accounted for nearly 6.4% of overall automobile sales during the year.