Find out Subsidies Provided For Electric Vehicles in India

Find out Subsidies Provided For Electric Vehicles in India


Electric vehicles being environmentally friendly might replace conventional automobiles soon. However, “cost” may be one of the most significant barriers for EVs, especially in a price-sensitive market like India. To make EV adoption popular in India, state governments are offering various subsidies for purchasing electric vehicles.

What is a FAME subsidy?

The government policies on electric vehicles in India includes an incentive programme called Faster Adoption and Manufacturing of Electric Vehicles (FAME). This programme, introduced in 2013, promotes the widespread use of electric vehicles inside the country. *

The FAME plan utilises a system called the Demand Incentive Disbursement Mechanism. The government sets the predetermined EV subsidy amount for each vehicle category (pure electric, hybrid, etc.) based on the technology and battery parameters.*

So, what exactly is a subsidy for FAME II (FAME 2)?

The second installment of the electric vehicle policy in India’s subsidy FAME II aims to support 7,000 e-buses, 5,000,000 electric three-wheelers, 55,000 electric vehicles, and 10,000,000 electric two-wheelers.*

How does the FAME subsidy programme work?

The FAME programme promotes the purchase of battery-powered vehicles by providing upfront incentives. The below-mentioned steps outline how to receive a FAME subsidy.

Step 1:You must first buy an electric vehicle that qualifies for the FAME incentive.

Step 2: The Original Equipment Manufacturer (OEM) must join the FAME programme before it can provide the bonus. If the OEM is not registered, they cannot provide you with the rebate.

Step 3: The dealer’s pricing quote for an eco-friendly vehicle can include subtracting any applicable subsidies. Say an electric car costs Rs. 1 lakh, and the government offers a grant of Rs.30000; the vendor can suggest a price of Rs. 70,000.

Step 4: After a final transaction, the dealer will notify the OEM of the purchase.

Step 5: The OEM will notify the National Automotive Board (NAB), which oversees the subsidy programme, of the transaction.

Step 6: After a thorough check, the OEM will receive the incentive. The dealer will receive a credit for the manufacturer’s subsidy.

Remember to buy comprehensive electric vehicle insurance to protect your new EV. Electric car insurance may be expensive compared to regular petrol/ diesel or CNG cars as the cost of replacement of the battery can be high. *

Why does the cost of EVs differ in different states of India?

The FAME subsidy programme works with individual states to create an electric vehicle policy in India. As a result, state government incentives for electric vehicles may not be uniform across the country. Therefore, the cost of an EV could be lower in some states than others.*

How can a subsidy programme increase EV sales in India?

The incentive programme may help to increase sales of electric automobiles in India by –

  • The FAME subsidies allow EV manufacturers to lower vehicle prices. The reduced pricing may attract more customers.*
  • The additional governmental incentives reduce the price difference between eco-friendly and conventional vehicles. Since the incentives make electric vehicles more accessible.*
  • Buyers can view EVs as a viable alternative to conventional automobiles if central and state governments provide attractive subsidies.*
  • In addition to supporting personal vehicles, the FAME programme also helps commercial vehicles. Expect state governments to purchase additional battery-powered public vehicles.*

To check the updated subsidy for electric cars and two-wheelers in your own state, please visit your state government’s website.

* Standard T&C Apply

‘Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale. ‘