Abstract:

Electric vehicles (EVs) are the single most important technology for the decarbonization of the transport sector. India has been actively promoting the uptake of EVs, including through the flagship Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme, which aims to accelerate the uptake of EVs, primarily through the provision of fiscal incentives to EV buyers. The scheme’s second phase, FAME II, was launched in April 2019 with an initial budget outlay of ₹10,000 crore, later increased to ₹11,500 crore; it concluded in March 2024. This study offer insights into the FAME II scheme. Further, we examine the impact of FAME II purchase subsidies on the cost dynamics of EVs and explore the opportunity of extending such subsidies to segments that are yet to be covered under the scheme. The study shows EVs accounted for just 7% of vehicle sales in India in FY 2023–2024. High upfront cost and a lack of access to financing continue to pose major challenges for the uptake of EVs in the country. Based on this analysis, the study develop policy recommendations for a possible third phase of the program.