The Ministry of Heavy Industries (MHI) is reportedly considering an allocation of up to Rs 500 billion to promote green technologies within various segments of the automobile industry. According to preliminary information from individuals familiar with a draft note, this financial provision could serve multiple purposes, including initiating the third phase of the FAME (Faster Adoption and Manufacturing of Hybrid & Electric Vehicles in India) program, incentivising green technologies at the manufacturers' level, or benefiting vehicle buyers.

Consultations are in progress with automakers and stakeholders, with no fixed decisions made. A government official mentioned that all options are under consideration and emphasized that the current FAME program has been running for nearly a decade. The official indicated that the discussions include an assessment of the program's necessity.

Currently, the FAME program aims to make electric vehicle (EV) purchases more affordable for buyers through subsidies. Additionally, a separate Rs 25.93 billion production-linked incentive scheme targets enhancing domestic manufacturing of advanced automotive technology and attracting investments in the automotive manufacturing value chain.

Initiated in 2015, the FAME subsidy scheme is set for a potential five-fold increase from its ongoing second edition's Rs 10.00 billion allocation, if the draft's proposed outlay gains approval. An MHI official confirmed the conceptual nature of the note, indicating that it would progress to the cabinet secretary before reaching the Prime Minister's Office for further consideration.

If accepted, the allocation distribution is expected to favour two-wheelers (42-45%), followed by buses (25-30%), trucks (8-10%), and the remaining for other vehicles. The allocation would include provisions for new technologies and charging infrastructure. The upcoming third phase of FAME is speculated to have support for hydrogen-powered vehicles, additional aid for electric three-wheelers, and a reduced share for two-wheelers.

Under the ongoing FAME-II scheme, the government has disbursed Rs 42.67 billion, benefiting 872,920 EV units. Notably, the majority of incentives went to two-wheelers (775,000), followed by three-wheelers (87,570), and four-wheelers (9,597), according to MHI data.