Otis Singleton
Electric vehicles are becoming increasingly popular in India, thanks to various government-sponsored initiatives and incentives. The Indian government has implemented several policies to promote the adoption of electric vehicles, including the FAME scheme, which stands for Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India. This scheme provides subsidies and incentives for the purchase of electric vehicles, encouraging the shift towards environmentally friendly transportation. Each state in India has its own criteria and policies for electric vehicles, resulting in varying levels of incentives and subsidies across the country. Factors such as charging stations, battery life, and running costs have been important considerations for buyers. This article will explore the different subsidy offerings by state, providing insight into the efforts made by the Indian government to promote the adoption of electric vehicles.
| Characteristics | Values |
|---|---|
| National subsidy scheme | FAME (Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India) |
| FAME launch date | 1 April 2015 |
| FAME subsidy | Up to Rs. 10,000 per kWh for electric vehicles |
| FAME tax rebate | Up to Rs. 1.5 lakh under Section 80EEB |
| FAME 2 subsidy | Covers two-wheelers, three-wheelers, four-wheelers, and electric buses |
| FAME 2 support | Over 200,000 vehicles, with subsidies amounting to INR 900 Cr |
| FAME 2 incentive for two-wheelers | INR 15,000 per kWh with a 40% incentive cap |
| FAME 3 | Third phase of the FAME scheme, providing enhanced incentives for EV buyers and support for charging infrastructure |
| States with highest EV subsidies | Gujarat, Maharashtra |
| States with no direct subsidies | Andhra Pradesh, Karnataka, Madhya Pradesh, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttarakhand, Uttar Pradesh |
| States with direct subsidies | Delhi, Assam, Maharashtra |
| States with EV policy | Telangana, Maharashtra, Assam |
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What You'll Learn
Gujarat offers the highest subsidy
Electric vehicles (EVs) are becoming an increasingly popular alternative to traditional petrol-run cars in India. However, their high cost poses a challenge to widespread adoption, especially in a price-sensitive market. To address this, the Indian government has introduced various subsidies, tax exemptions, and incentives to promote the use and manufacturing of EVs.
One state that has stood out in its support for EVs is Gujarat, which offers the highest subsidy on electric vehicles in the country. The Gujarat EV Policy, in effect from July 1, 2021, to June 30, 2025, aims to encourage the production and adoption of EVs. The policy sets aside a subsidy of up to ₹20,000 for two-wheelers, ₹50,000 for three-wheelers, and a maximum benefit of up to ₹1.5 lakh for four-wheelers. This makes EVs more affordable for prospective buyers and encourages a shift towards electric mobility.
The Gujarat EV Policy also seeks to incentivize infrastructure producers to create robust EV charging stations and promote start-ups in the electric transportation industry. By lowering pollution levels, the policy aims to enhance the environmental quality of the state. The impact of these subsidies is evident in the sales growth of the EV market in Gujarat, with the state becoming a center for producing EVs and related machinery.
In addition to the generous subsidies offered by the Gujarat state government, EV buyers in the state can also take advantage of the FAME (Faster Adoption and Manufacturing of Electric Vehicles) scheme, a government initiative providing incentives for setting up charging infrastructure and promoting EV adoption. The FAME II scheme, which went live on April 1, 2019, offers a subsidy of up to ₹15,000 per kWh for two-wheelers and ₹10,000 per kWh for four-wheelers, further reducing the upfront cost of purchasing EVs.
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FAME scheme for commercial vehicles
The Indian government has set up an electric vehicle scheme called the Faster Adoption and Manufacturing of Electric Vehicles (FAME) to promote the use of electric vehicles. The FAME scheme, launched in 2015, is based on the Demand Incentive Disbursement Mechanism. It provides incentives for setting up charging infrastructure, financial support for research and development in the electric vehicle sector, and promotes the adoption of electric vehicles among government departments and public sector undertakings.
The FAME scheme has helped reduce the upfront cost of buying environmentally friendly cars. Under the scheme, one can receive a subsidy of up to ₹10,000 per kWh for electric vehicles. The subsidy amount varies from state to state and depends on the battery capacity, technology, and cost of the vehicle. The FAME India Scheme covers a variety of models, including electric two-wheelers, three-wheelers, buses, cars, and hybrid vehicles, encouraging a diverse range of electric options. The scheme also emphasizes public transport and commercial electric vehicles.
The FAME-II scheme, launched in 2019, has a longer duration of five years and introduces a more structured subsidy system. It has an outlay of ₹10,000 crore for a period of 3 years, with about 86% of the funds allocated for demand incentives to create demand for electric vehicles in the country. The scheme will be applicable mainly to vehicles used for public transport or those registered for commercial purposes in the three-wheeler, four-wheeler, and bus segments.
The FAME-III scheme is currently being worked on by the government and is expected to be finalized soon.
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State-wise subsidies and criteria
The Indian government has promoted the use of electric vehicles by offering manufacturers and buyers various subsidies, tax exemptions, and incentives. The FAME (Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India) scheme, launched in 2013, is a government-sponsored incentive program for electric vehicles. Under the FAME scheme, you can receive a subsidy of up to ₹10,000 per kWh for electric vehicles, with the exact amount decided based on the battery and technology specifications. The FAME scheme also provides incentives for setting up charging infrastructure and promoting the adoption of EVs among government departments.
Each state has its own criteria and policies for electric vehicles, so state government incentives may vary. Here is a list of some state-wise subsidies and criteria:
Gujarat
Gujarat offers the highest subsidy on EV vehicles in India. It is offering a maximum subsidy of Rs.10 lakh with the aim of setting up about 528 charging stations in the state. The state government has also announced a waiver of registration charges.
Maharashtra
Maharashtra offers an early bird incentive worth Rs. 1 lakh, taking the maximum subsidy to Rs. 2.5 lakhs for electric four-wheelers. Maharashtra has also exempted road tax and registration fees for electric vehicles.
Delhi
The Delhi Government offers an EV vehicle subsidy of INR 10,000 kWh on 4-wheelers with a cap of INR 1.5 Lakh as the maximum subsidy for the first 1,000 buyers. For 2-wheelers, you enjoy INR 5,000 per kWh with a maximum subsidy of INR 30,000 with a scrapping incentive of INR 10,000. The state has also exempted road tax and registration fees for electric vehicles.
Assam
The Electric Vehicle Policy of Assam, 2021, aims to improve air quality by enabling EVs to contribute to 25% of all new vehicle registrations by 2026.
Meghalaya
Meghalaya’s electric vehicle policy is aimed at early buyers and covers a smaller number of vehicles.
Andhra Pradesh, Karnataka, Madhya Pradesh, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttarakhand, and Uttar Pradesh
These states do not offer a direct subsidy on electric vehicles. However, you can get a complete waiver on road tax until the end of the respective state's EV policy.
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Tax exemptions and incentives
Electric vehicles (EVs) are becoming increasingly popular in India, thanks to various government-sponsored subsidy programmes and incentives. The Indian government has promoted EV use by offering manufacturers and buyers subsidies, tax exemptions and incentives.
The FAME scheme, or Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India, is a government-sponsored incentive programme for electric vehicles. The scheme was launched in 2013 as part of the National Mission on Electric Mobility 2011/National Electric Mobility Mission Plan 2020. FAME I was launched on April 1, 2015, and aimed to support the adoption of electric and hybrid vehicles by providing subsidies on their purchase. This phase was extended until March 31, 2019. The FAME scheme is based on the Demand Incentive Disbursement Mechanism, and the subsidy amount for each vehicle category (pure electric, hybrid, etc.) is decided based on the battery and technology specifications. On April 1, 2019, an expanded version of the original scheme, FAME 2, was launched, which focused on developing the electric vehicle ecosystem in India, including charging infrastructure, R&D, and supporting the manufacturing of electronic components. FAME 3 is the third phase of the scheme, which provides enhanced incentives for electric vehicle buyers and supports the development of charging infrastructure. Under the FAME scheme, you can receive a subsidy of up to ₹10,000 per kWh for electric vehicles, and a tax rebate of up to ₹1.5 lakh under Section 80EEB for purchasing electric vehicles.
The FAME scheme was designed to promote the production and sale of commercial electric vehicles like e-rickshaws and e-buses, in addition to electric car subsidies. For commercial vehicles, the government offers an incentive of ₹20,000 per kWh to state transport units. The technology, battery capacity and price all play a role in determining the precise amount of commercial vehicle subsidies. Electric three-wheelers or e-rickshaws under ₹5 lakh are also eligible for incentives.
The Indian government has also set up an investment promotion cell that supports the EV industry by addressing its concerns and providing necessary information. The Ministry of Road Transport and Highways (MoRTH) announced in August 2022 that all battery-powered vehicles are exempt from fees for issuing or renewing registration certificates.
Each state has its own criteria and policy for electric vehicles, so state government incentives may vary. For example, Gujarat offers the highest subsidy on EV vehicles in India, and offers a maximum subsidy of Rs.10 lakh with the aim of setting up about 528 charging stations in the state. While the state government hasn't waived off the road tax on electric vehicles, it has announced a waiver of registration charges. Maharashtra also offers an early bird incentive worth Rs. 1 lakh, taking the maximum subsidy to Rs. 2.5 lakhs for electric four-wheelers. The Delhi Government offers an EV vehicle subsidy of INR 10,000 kWh on 4-wheelers with a cap of INR 1.5 Lakh as the maximum subsidy for the first 1,000 buyers. For 2-wheelers, you enjoy INR 5,000 per kWh with a maximum subsidy of INR 30,000 with a scrapping incentive of INR 10,000.
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Reduced upfront costs
The upfront cost of purchasing an electric vehicle in India can be daunting, but government-sponsored subsidy programs are helping to make them more accessible and affordable for consumers. The Indian government has implemented the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme to promote the use of EVs. This scheme provides incentives for setting up charging infrastructure, financial support for research and development, and promotions to encourage the adoption of EVs among government departments and public sector undertakings.
Under the FAME scheme, consumers can receive a subsidy of up to ₹10,000 per kWh for electric vehicles, helping to reduce the upfront cost of purchasing environmentally-friendly cars. This subsidy amount is determined based on the technology and battery specifications of the vehicle. For instance, electric three-wheelers or e-rickshaws priced under ₹5 lakhs are eligible for incentives, with the exact amount depending on the cost, technology, and battery capacity of the vehicle.
The FAME scheme also encourages the manufacturing and sales of commercial electric vehicles like e-rickshaws and e-buses. To boost the purchase of electric buses, the government offers an incentive of ₹20,000 per kWh to state transport units, with the subsidy amount for commercial vehicles being subject to bidding by OEMs. Additionally, electric three-wheelers priced under ₹15 lakhs qualify for incentives, further reducing the upfront cost for buyers.
The state of Gujarat offers a maximum subsidy of ₹10 lakhs for setting up charging stations, aiming to establish 528 charging stations. While Gujarat has not waived road tax, it has announced a waiver of registration charges for electric vehicles. Maharashtra also offers an early bird incentive worth ₹1 lakh, taking the maximum subsidy to ₹2.5 lakhs for electric four-wheelers. The Delhi Government provides a subsidy of ₹10,000 kWh on 4-wheelers, with a maximum subsidy of ₹1.5 Lakh for the first 1,000 buyers.
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Frequently asked questions
FAME stands for Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India. It is an incentive scheme for electric vehicles launched by the Government of India. The scheme was presented in 2013 as part of the National Mission on Electric Mobility 2011/National Electric Mobility Mission Plan 2020.
The FAME scheme provides incentives for setting up charging infrastructure, financial support for research and development in the electric vehicle sector, and promotes the adoption of EVs among government departments and public sector undertakings.
No, each state has its own criteria and policy for electric vehicles, so the state government's incentives may vary.
Gujarat offers the highest subsidy on electric vehicles in India.
The following states do not offer direct subsidies on electric vehicles: Andhra Pradesh, Karnataka, Madhya Pradesh, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttarakhand, and Uttar Pradesh. However, these states offer other incentives such as a complete waiver on road tax and registration charges.
