Finance Minister Nirmala Sitharaman almost doubling FAME 2 Subsidies outlay with a 78 percent jump over FY23 allocations has evoked mixed reactions from domestic electric vehicle (EV) players.
Speaking to Autocar Professional, Sohinder Gill, Director General of industry body Society of Manufacturers of Electric Vehicles (SMEV) said, "Nothing has changed for the industry in the new allocations as it doesn't impact the overall outlay made by the government when the FAME 2 subsidy was introduced."
Sitharaman's allocation of Rs 5,172 crore for FY24 is one of the steepest in the history of the scheme since it was introduced in 2019 with the Rs 2,898 crore allocated for FY23 being the second highest allocation.
Commenting on the FAME 2 subsidy revision, Gill said, "The figure given in the current Budget is a leftover budget of FY24, which was declared in 2019."
Gill is right in his assessment; the basket of FAME 2 allocation remains the same at Rs 10,000 crore when it was announced in 2019 with the government taking a step-by-step approach in its allocation over the years. In FY20 the government allocated Rs 500 crore for FAME 2 which was revised to Rs 318 crore in FY21.
In FY22, the Government of India increased the allocation to Rs 800 crore which was further revised to Rs 2,897 crore in FY23 and to Rs 5,172 crore in FY24.
Hemal Thakkar, Director of CRISIL Research, sharing his opinion on the higher outlay, said that for the last few years the government has been increasing the FAME 2 subsidies outlay and this is good for the EV Industry. Thakkar added that the exemption of the plant and machinery along with the performance-linked incentive (PLI) will work hand-in-hand to reduce the cost of cell manufacturing and provide a "fillip to electric vehicle manufacturing with costs coming down in the long term."
Higher allocations and unpaid subsidies put EV OEMS in a tough spot
This story is from the 15th February 2023 edition of Autocar Professional.
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This story is from the 15th February 2023 edition of Autocar Professional.
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