Budget 2024 & FAME III: What can the EV sector expect FM Sitharaman to roll out this year?

Budget 2024: As the interim Union Budget 2024 draws near, electric vehicle (EV) manufacturers are anticipating several measures to drive the industry forward. Some are seeking support in the Goods and Services Tax (GST) regulations, while others are looking for greater clarity on the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME III) scheme. 

The FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) Scheme was launched in 2014. The Centre had earmarked Rs 895 crore for FAME I for the period between 2015 and 2019. The Phase II of the FAME Scheme was approved in 2019 and implemented in April 2019 with an outlay of Rs 10,000 crore for a period of 3 years.

The Centre is expecting to be unveiled the third instalment of the FAME scheme in the Budget 2024 and earmark Rs 10,000-12,000 crore. 

The FAME III implementation was the EV industry's top demand as the stakeholders were asking to extend the programme due to the exclusionary conditions of other support mechanisms like the production-linked incentive (PLI) scheme, which has high minimum net worth requirements.

"FAME-I and FAME-II have undoubtedly helped accelerate EV adoption among the Indian masses. However, as policymakers focus on crafting the strategy for FAME-III, a different approach is needed for electric 2- and 3-wheelers. In the current scenario, electric 2-wheelers and 3-wheelers have reached cost parity, and taking certain steps can lead to even greater consumer adoption than the proposed kWh-based decreasing subsidies. For instance, there is a proposed allocation of Rs 8,156 crore for electric 2-wheelers and Rs 4,100 crores for electric 3-wheelers," said Varun Goenka, Co-founder & CEO, Chargeup.

"As thе 2024 Budgеt approachеs, thе automotivе industry еagеrly awaits insights into thе GST landscapе, particularly for еntry-lеvеl two-whееlеrs. Anticipation surrounds updatеs on thе potеntial FAME 3 schеmе, PLI sops, and rеvisions to GST for two-whееlеrs. Wе hopе for a continuation of grееn mobility еmphasis. Thе rеduction in customs duty on EV parts in thе previous budgеt spurrеd local manufacturing, and similar amеndmеnts arе еxpеctеd in thе 2024 budgеt. Calls for a uniform 5% GST on all EV sparе parts, alignеd with thе 5% GST on vеhiclеs, rеsonatе within thе industry, as we aim for a morе еquitablе tax structurе," said Hari Kiran, Co-Founder and COO, eBikeGo.

Talking about GST reduction, Goenka added: "Besides, addressing EV financing is crucial. Subsidizing financing can make electric vehicles more accessible for users. Given that the primary aim of FAME-III subsidies is to accelerate EV adoption, another significant step could be to reduce the GST on batteries. A 13 per cent reduction in GST on batteries would make EVs approximately 13 per cent cheaper, achieving parity in adoption compared to conventional 2-wheelers and 3-wheelers." 

“Budget 2024 brings in a great expectation of unveiling the FAME-III. The result of this announcement to impact the growth of the EV industry in India as it will boost EV Adoption. FAME-III will bring transformative reforms in the auto sector, specifically geared towards nurturing green and sustainability in the Mobility sector. It will help India to combat pollution and address climate change. To have widespread EV adoption in India, the growth of EV infrastructure plays a pivotal role as well. Hence, we are looking forward to tax reformation that not only supports our industry but also encourages consumers to embrace electric vehicles,” said Raghav Arora, Co-Founder & CTO, Statiq.

"Currently, buses belonging to only state transport undertakings (STUs) are supported under the FAME-II scheme. As active participants, we anticipate and encourage forthcoming budget and policy adjustments that extend support to our sector. As private buses account for about 90% of the approximately 2 million buses on Indian roads, this initiative can prove to be revolutionary for reducing greenhouse emissions with extensive electrification of these buses.
With government support, private players can expand charging infrastructure, create jobs, and boost economic growth by promoting EV adoption," said Sudhakar Reddy Chirra, Founder & CEO, FreshBus. 

"As we anticipate Budget 2024, India's electric vehicle (EV) sector beckons a strategic shift towards holistic growth aligned with the net-zero aspirations of Bharat. Budget 2024 must prioritise streamlined regulatory processes, ensuring seamless, affordable access to finance, thereby catalyzing industry growth and contributing to our net-zero goals. The 'Make in India' initiative should further be underscored. Comprehensive policies are imperative, intensifying R&D investments, expanding charging infrastructure, and boosting battery manufacturing. Recognising the pivotal role of auxiliary sectors like charging solutions and battery technology, collaborative initiatives involving government, industry, and Fintech entities are crucial for affordability, innovation, and establishing India as a global hub for sustainable mobility," said Sameer Aggarwal, CEO and Founder at Revfin.

Also read: Budget 2024: MSME sector expects FM Sitharaman to address issues related to institutional credit, digital transformation

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