Electric Mobility Transition (FAME-1 &FAME-2)
The transportation sector is one of the largest consumers of imported crude oil and a major contributor to urban air pollution. To achieve long-term energy security and environmental sustainability, India is rapidly shifting from traditional internal combustion engine vehicles to Electric Vehicles (EVs). The foremost national policy driving this transition and providing direction to the emerging EV segment is the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme.
Drafted by the Department of Heavy Industries (DHI) under the Ministry of Heavy Industries, the policy is designed to reduce the high upfront cost of EVs. It extends financial incentives strictly to specific EV models that meet technical criteria and domestic manufacturing requirements. The policy has been implemented in two major phases: FAME I and FAME II.
FAME I (2015 – 2019)
The first version of the policy came into effect in April 2015. Originally intended as a two-year program, its term was eventually extended to 31 March 2019.
As the country’s first major automotive policy dedicated to sustainable mobility, it laid the groundwork for the EV ecosystem.
- Financial Allocation: The policy allotted INR 795 crore to be used for demand creation (subsidies), technology platforms, pilot projects, and charging infrastructure. By the end of its term, INR 529 crore had been utilized.
- Scope of Vehicles: The first phase was broad. It provided purchase incentives to all EV categories, including electric two-wheelers (e-2W), three-wheelers (e-3W), personal four-wheelers (e-4W), light commercial vehicles (LCV), and electric buses.
- Achievements: Over its four-year run, FAME I successfully incentivized 2.78 lakh EVs by providing direct subsidies worth INR 343 crore and sanctioned 465 electric buses to various state transport departments.
BFAME II (2019 – 2024)
Building on the foundation of the first phase, a vastly expanded and improved FAME II policy was introduced on 1 April 2019. Its term was later extended to 31 March 2024.
This second phase represents a massive scale-up in the government’s ambitions, shifting the focus heavily toward public and shared transportation.
- Massive Financial Outlay: FAME II was launched with a significantly larger budget of INR 10,000 crore. The primary focus was on encouraging mass EV adoption through demand incentives and establishing a widespread network of charging infrastructure.
- Shift to Commercial Vehicles: Unlike FAME I, which subsidized personal cars, FAME II strategically changed its target audience. While it covers all electric two-wheelers (e-2W), the demand incentives for all other categories (e-3W, e-rickshaws, e-4W, and e-buses) are explicitly directed towards commercial vehicles only.
- Incentive Structure: The subsidy is calculated scientifically based on the size of the battery. FAME II provides a standard incentive of INR 10,000 for every kWh of battery capacity for most EVs. To encourage clean public transport, electric buses are granted a maximum demand incentive of INR 20,000 per kWh.
National policies like FAME I and II are absolutely crucial in overcoming the biggest barrier to electric mobility: the high initial purchase price of the vehicles. By reversing this inherent price disadvantage, these policies have successfully kickstarted the Indian EV sector. The impact is clearly visible in the market data; during the financial year 2022-23, EV sales crossed the historic 1 million unit mark for the first time, growing to form more than 6 percent of all vehicle sales in the country.
