Decoding the Transformative Scheme of Electric Vehicle under FAME-II
The future of transportation is electric, and India is actively moving toward this clean and sustainable shift. One of the most crucial steps taken by the Indian government to promote electric vehicle (EVs) is the FAME (Faster Adoption and Manufacturing of Electric Vehicles) scheme. Specifically, FAME-II, the second phase of this initiative, has played a transformative role in reshaping India’s mobility ecosystem.
In this blog, We’ll Decoding the Transformative Scheme of Electric Vehicle under FAME-II —its structure, eligibility criteria, incentives, achievements, and its role in laying the foundation for India’s electric future.
What is the scheme of Electric Vehicle under FAME-II?
FAME-II, launched on April 1, 2019, is the second phase of the original FAME scheme introduced in 2015. While the first phase was more experimental in nature, FAME-II came with a clear mission: to scale up EV adoption, support manufacturing, and build necessary infrastructure.
The central aim was not only to increase the number of EVs on roads but also to develop a robust domestic EV manufacturing sector, reduce dependency on fossil fuels, and curb vehicular emissions.
Scheme Duration and Financial Outlay
At first, it was planned for three years; FAME-II was set to end by March 31, 2022. However, recognizing the growing momentum and stakeholder response, the government extended the scheme till March 2024, with continued support into 2025 through newer programs.
FAME-II’s overall budget was ₹10,000 crore, which was later increased to almost ₹11,500 crore. This budget was allocated to support demand incentives, set up charging infrastructure, and promote research and innovation in EV technology.
Eligibility Criteria for Incentives
FAME-II introduced price and category-specific eligibility to ensure efficient use of subsidies. The scheme focused on public and shared transportation, and commercial vehicles rather than private electric cars.
Here’s how the eligibility broke down:
- Electric Buses: Eligible up to ₹2 crore in cost.
- Strong and Plug-in Hybrids: Eligible up to ₹15 lakh.
- Three-Wheelers: Price capped at ₹5 lakh.
Electric Two-Wheeler Subsidy: Subsidies for electric two-wheelers are available under 1.5 lakh . To qualify, the vehicle also had to meet localization and performance standards laid out by the Department of Heavy Industries (DHI).
Incentive Structure
The incentive model under FAME-II was based primarily on battery capacity, calculated per kilowatt-hour (kWh):
₹10,000 per kilowatt per/hour: Did you know that 10,000 rupees is given for every kilowatt-hour of battery capacity used in electric 2-wheelers, 3-wheelers, and 4-wheelers.
₹20,000 per kWh: For electric buses, with the intent to encourage State Transport Units (STUs) to transition to EV fleets.
These subsidies significantly reduced the upfront cost of vehicles, making them competitive with conventional internal combustion engine (ICE) vehicles.
Key Areas of Focus
FAME-II wasn’t just about giving subsidies. It targeted three core pillars:
Demand Creation
Support for the purchase of EVs across eligible segments, particularly public transport and shared mobility.
Charging Infrastructure
Funding to set up charging stations in cities, highways, and remote areas to address “range anxiety” and improve confidence in EVs.
Technology Development
Encouraged innovation in battery manufacturing, localization of components, and research into new EV technologies, including battery swapping and hydrogen fuel cells.
Achievements of the FAME-II subsidy
By the end of 2024, when the deadline was extended, the FAME-II system had made significant progress. Did you know that a total of 7.66 lakh electric vehicles have received financial support or subsidy from the government under this framework? 6,300+ electric buses permitted for use in 65 cities, improving urban mobility.
More than 35,000 public charging stations sanctioned, promoting EV usage nationwide. Surge in domestic manufacturing of lithium-ion batteries and EV components. Contribution to job creation in both the vehicle manufacturing and energy infrastructure sectors.
What Happened After FAME-II?
Though FAME-II formally concluded in March 2024, it gave rise to new policy frameworks, building on its momentum:
1. PM-eBus Sewa Scheme
The Government of India launched the ₹10,900 crore scheme in September 2024 with the goal of deploying 38,000 electric buses in 169 cities, with a particular emphasis on tier-2 and tier-3 metropolitan centers. It adopted a Public-Private Partnership (PPP) model with a Payment Security Mechanism (PSM) to protect operators and investors.
2. PM E-DRIVE Scheme
Introduced in October 2024, this scheme aims to further drive the adoption of electric 2-wheelers,
3-wheelers, and commercial vehicles while strengthening the supply chain and charging ecosystem.
What to Expect in FAME-III?
The Indian government is said to be developing the third-phase (FAME-III)program and , expected to be launched by the end of the year 2025. This phase is likely to:
Extend subsidies to private electric 4-wheelers.
Promote battery-swapping infrastructure. Include hydrogen fuel cell vehicles and hybrid technologies. Increase support for rural EV adoption and last-mile delivery vehicles. The government is focusing on enhancing EV recycling and second-life battery use.
Why FAME Matters for India?
India has set it goal that it should be targeting net-zero carbon emissions by 2070, and FAME is one of the most critical steps in that journey. With the global push toward sustainability, the FAME scheme ensures that India stays competitive in the green technology race, reduces import dependency, and becomes a manufacturing hub for electric mobility. It also helps in the EV adoption in India.
Moreover, it aligns with global environmental goals and supports India’s commitment under the Paris Climate Agreement.
The Key Takeaways
FAME-II was more than just a subsidy scheme—it was a strategic move to build an entire ecosystem around clean mobility. While challenges remain, especially in infrastructure, consumer awareness, and rural adoption, the impact of FAME-II has been undeniably significant.
With PM e-Bus Sewa, PM E-DRIVE, and the upcoming FAME-III, India is on the cusp of a transformative era in electric mobility. Policymakers, manufacturers, and consumers must work in synergy to ensure the momentum not only continues but accelerates.
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Frequently Asked Questions (FAQs)
1. What is the FAME-II scheme?
Answer: It is a government scheme to accelerate electric vehicle adoption in India by offering purchase subsidies, supporting EV manufacturing, and funding infrastructure development.
2. Which vehicles were eligible under FAME-II?
Answer: Electric two-wheelers priced below ₹1.5 lakh, Electric three-wheelers below ₹5 lakh, Hybrid vehicles under ₹15 lakh, and Electric buses priced up to ₹2 crore
3. Did FAME-II support private electric cars?
Answer: No, FAME-II primarily focused on public and shared vehicles. Private electric four-wheelers were largely excluded from subsidies.
4. How did FAME-II help in EV adoption?
Answer: FAME-II helped subsidize over 7.6 lakh electric vehicles, deployed 6,300+ electric buses, and sanctioned thousands of charging stations for EV adoption.
5. How were FAME-II subsidies calculated?
Answer: Incentives were based on battery capacity, offering ₹10,000 per kWh for electric two-, three-, and four-wheelers, and ₹20,000 per kWh for electric buses used by public transport units.