Union Budget 2024 MHI is preparing 3 budget plans for the FAME3 program

According to insiders, the Ministry of Heavy Industry (MHI) has presented three proposals for the third version of the government’s flagship program aimed at promoting the introduction of electric vehicles.

Faster deployment and production of hybrid and electric vehicles (FAME) 3.0 is likely to be announced in the Union Budget 2024.

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According to a senior government official, one of the proposals includes plans to include vehicles powered by alternative sources such as hydrogen and biofuels.

Money matters

Sources told Business Standard that the budget of the three proposals is likely to range from Rs 12,600 crore to over Rs 30,000 crore.

MHI has approval in principle for the amount of Rs 10,000 crore issued by the Department of Expenditure, Ministry of Finance for

FAME diagram.

“The industry has submitted proposals worth over Rs 30,000 crore for this sector. However, the Ministry of Finance believes that expenditure on the program should remain the same as in the second phase,” said a senior government official.

Inquiries sent to the Department of Expenditure and MHI remained unanswered as of press time.

The expenditure department is reluctant to allocate more than Rs 10,000 crore to the sector as there are two production-linked incentive (PLI) schemes for sector players – a PLI worth Rs 25,938 crore for automotive and auto parts and a scheme worth Rs 18,100 crore for advanced cell chemistry.

Moreover, the government has introduced the PM-eBus Sewa program with a budget of Rs 57,613 crore for the supply of 10,000 electric buses. MHI has also set up a payment security fund with a total value of Rs 4,126 crore.

“The government has already launched programs with a total budget of over Rs 1 trillion. Any decision will be taken keeping in mind the fiscal situation,” another official said.

Electric ambitions

FAME was launched in 2015 with an initial outlay of around Rs 900 crore, which increased to around Rs 10,000 crore in the second phase in 2019. The FAME 2.0 program ended in March this year.

This was followed by the introduction of the Electric Mobility Promotion Program 2024 (EMPS 2024) with a budgetary outlay of Rs 500 crore. This program aims to support around 400,000 electric two-wheelers (e2W) and three-wheelers (e3W) over four months. The program is scheduled to end on July 31.

With EMPS coming to an end and the budget scheduled for next month, the industry is demanding either an extension and expansion of EMPS with an increased budget or a new phase of FAME.

“We have sent sectoral proposals to MHI. To maintain the momentum of EV adoption in the country, the sector will need a budget of over Rs 30,000 crore,” said an auto industry official.

The third phase will mainly focus on improving the public mass transport sector and strengthening the charging infrastructure. The government has proposed to maintain the third phase for two years, with plans to discontinue subsidies for categories with high penetration such as two- and three-wheelers.

“The plan is to bring the Indian EV industry at par with the global EV industry. The subsidy has been set for two years as we believe this period is sufficient for the sectors to achieve their goals,” the source said.