Government likely to discontinue FAME II scheme after next fiscal: Report

However, the industry has already approached the government with a request to extend the FAME II scheme beyond FY24.

Under the FAME scheme, companies are allowed to offer a discount of up to 40 percent to customers on the cost of locally manufactured vehicles and claim the discounted amount as a subsidy from the government. The investigations launched by the ministry are focused on the claimed local content of these vehicles.

“We are unlikely to extend the scheme beyond FY24,” a senior government official told ET. The key FAME II goals will be achieved by end of the next fiscal, the official added.

The FAME II scheme aims to support 1 million EV two-wheelers (E2W) and 7,000 electric buses (e-buses), and about 800,000 E2Ws and 3,500 e-buses are likely to hit the roads by the end of March under the scheme.

Under the likely replacement of the FAME II scheme, which is the PLI scheme, benefits will be accrued at the manufacturers' end.

Through PLI programmes covering advanced chemistry cell (ACC) battery storage, automobiles, and auto components, the benefits will be transferred to the manufacturer as opposed to the FAME II, in which the subsidy is disbursed at the point of sale of the vehicles.

The government has already earmarked Rs 25,938 crore under the PLI programme for automobiles and auto components and as many as 115 companies have filed applications under the segment, which was notified in September 2021.

Out of the total 115 companies, five auto original equipment manufacturers (OEMs) had applied for both parts of the scheme.

The PLI programme has been successful in attracting investments in the manufacturing of automobiles and components of Rs 74,850 crore. Out of the total, about Rs, 45,016 crore is from approved applicants under the Champion OEM Incentive Scheme.

As for batteries, the government has allocated Rs 18,100 crore with a goal to establish a manufacturing capacity of 50-gigawatt hours (GWh) of advanced chemistry cells (ACCs) to enhance India's manufacturing capabilities.