FAME 2 subsidy rule changed for electric cars.Image Credit source: Freepik
To promote electric vehicles in India, the government runs the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme. At present its second phase (FAME II) is going on, under which subsidy is provided to EV buyers. This gives an opportunity to buy electric vehicles at a lower price. FAME 2 subsidy has a major contribution in promoting green mobility in the country. However, a recent decision of the government has increased the anxiety of companies manufacturing electric vehicles.
Union Heavy Industries Ministry has issued a notification regarding FAME II subsidy. The government has changed the rules for subsidy on electric vehicles. After the arrival of new guidelines, a new challenge has arisen for EV manufacturing companies. Let us know that the government fame 2 What changes have been made in subsidy?
Subsidy will be available on Ex-Factory Price
While issuing the gazette, the Ministry of Heavy Industries made it clear that now FAME 2 subsidy will be available on the basis of ex-factory price of electric vehicles. According to the notification, subsidy will not be issued on the basis of ex-showroom price of electric vehicles. These rules are for electric three wheelers and four wheelers. The government has already implemented these changes for electric two-wheelers.
FAME 2 subsidy will be available only till this day
The government has also told the deadline for Fame 2 subsidy. Subsidy on electric vehicles will be available only till March 31 or till the fund ends. Let us tell you that the phase of FAME is ending on 2 April 2024. The auto industry is demanding to continue this subsidy in future also. At present, the government has not expressed its intention regarding Phase 3 (FAME III) subsidy of FAME.
Will electric cars become expensive?
Changes in Fame 2 subsidy and negligible possibility of Fame 3 have put a wrinkle on the forehead of EV companies. Due to ex-factory subsidy, there is a danger of electric cars becoming expensive. Companies like Tata Motors and Mahindra can increase the prices of their electric cars.
Ex-factory price is the price which does not include GST, freight, other taxes and dealer’s commission etc. On the other hand, ex-showroom price is the price at which the dealer buys the car from the company. This price does not include the registration fee, which is charged by the RTO. Road tax and insurance costs are also not included in the ex-showroom price.
Till now subsidy is available on ex-showroom price, due to which customers benefit more. Electric cars can become expensive due to subsidy on ex-factory price. Let us tell you that the government has increased the amount of Fame 2 Scheme from Rs 10,000 crore to Rs 11,500 crore.