The government is likely to put an end to the FAME (Faster Adoption and Manufacturing of Electric Vehicles) subsidy scheme once FAME II comes to an end in March, 2024. Instead of introducing a third phase of the scheme or FAME III, inter-ministerial discussions are on to replace it with a modified production-linked incentive (PLI) scheme for the auto sector, which will also be applicable for passenger electric vehicles.
Currently the FAME II scheme is applicable to two-wheelers, three-wheelers, and four-wheelers which are used for public transport. It has a budgetary outlay of Rs 10,000 crore.
Sources said that since the government is working on some sops, which would enable Tesla to set up its manufacturing plant in India, it makes sense to come out with a modified auto PLI (PLI 2.0) which takes into account subsidies given to two-wheelers, three-wheelers, four-wheelers used for public transport as well as EVs.
Since the disbursement of PLIs are on the basis of pre-determined incremental sales and production targets, there would also be no scope for players to indulge in irregularities which were found in the FAME scheme by certain two-wheeler manufacturers.
At present, there are two PLI schemes for the auto sector, which includes batteries. The one which relates to automobiles and auto components has an outlay of Rs 25,938 crore, and the one relating to advanced chemistry cell (ACC) batteries has an outlay of Rs 18,100 crore. It’s likely that a comprehensive Auto PLI 2.0 will have a higher outlay than the combined outlay of the current Auto PLI.
Sources said that a comprehensive Auto PLI 2.0 which subsumes all categories of electric vehicles would make sense in negotiating with Tesla for its manufacturing plant in India. The PLI 2.0 scheme will be open to all the players hence a level-play field would be maintained. Companies which earlier did not apply for the PLI scheme would get a chance to get in and the current ones would have the option of migrating to the new one.
Official sources said that modifying or coming out with a PLI 2.0 will not be a new thing, as it has earlier been done for telecom products and IT Hardware PLI schemes. “It will be fair to all the parties,” officials said.
