Budget 2024: Govt cuts FAME allocation by over 44% to Rs 2,671.33 crore in FY25

The government has earmarked Rs 2671.33 crore, over 44 per cent lower than the revised estimate for 2023-24, towards the Faster Adoption and Manufacturing of Hybrid and Electric Vehicle in India (FAME) scheme for FY25.

The proposal comes at a time when there is no clarity over whether the existing FAME II plan, already extended by two years, will see another extension or the government will announce a new FAME III scheme.

According to the Expenditure Budget document unveiled on Thursday, Rs 2,671.33 crore has been earmarked under the FAME scheme for the next financial year beginning April 1.

In 2023-24, Rs 5,171.97 crore was allocated for the scheme, with revised estimates showing around Rs 4,807.4 crore spent by the end of the fiscal year. In comparison to the revised estimate, the outlay for 2024-25 indicates a cut of over 44 per cent towards the expenditure earmarked for the scheme.

The reduction in allocation to the FAME scheme for FY25 was announced on Thursday in the interim Budget. It follows a reduction in subsidy for electric two-wheelers last year, amid allegations that seven electric two-wheeler companies did not comply with the localisation norms required to avail of the subsidies.

The government slashed the incentive from Rs 15,000 per kWh of battery to Rs 10,000 per Kwh from 1 June 2023. The deadline for the ongoing FAME II scheme is March 31, 2024, with a budget outlay of Rs 10,000 crore.

The main objective of the scheme is to offer upfront incentives for the purchase of electric and hybrid vehicles and add more charging stations.

The FAME scheme, launched in April 2015, is the umbrella programme of the government to promote electric and hybrid vehicles in the country. The first phase of the scheme ran till 2019 and the second phase ends in March this year.

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