Budget 2024 Expectations: FAME scheme, aid for vehicle scrapping and other expectations of the auto industry

• The Budget 2024 will be tabled by the finance minister Nirmala Sitharaman on July 23.
• The auto industry’s expectations from the Budget 2024 include FAME 3 scheme, incentives for hybrids and more.
• Here are the key expectations from the auto industry for the Budget 2024.

The Budget 2024 is set to be tabled on July 23 by the finance minister Nirmala Sitharaman and like each sector, the Indian auto industry also has set a lot of expectations from the Narendra Modi-led government’s first budget of its third term.

From a boost to electric vehicles to infrastructure development, the auto sector has a series of expectations that it hopes will be addressed in the upcoming budget. This article delves into the key budget expectations of the auto industry in India

FAME 3 scheme

The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME 2) has been integral for the electric vehicle (EV) makers as it has helped keep EVs affordable for the common man. With the government reworking the FAME 2 scheme and then ending the scheme, the prices of EVs have increased.


With Budget 2024, EV makers will look towards the government for the FAME 3 scheme. The government is expected to announce the FAME 3 scheme with an outlay of ₹10,000 crore.

While the exact details of the scheme will only be known once the budget is announced, it will be aimed at boosting demand by subsiding the cost, while also promoting local manufacturing of key components.

“In the upcoming budget, we advocate for initiatives and subsidy structures without segment caps which will in turn foster innovation and growth across multiple segments. Recent discussions surrounding the implementation of FAME 3 present a notable opportunity to enhance EV adoption in India,” said Niraj Rajmohan, CTO and Co-Founder, Ultraviolette.

"Proposed measures to promote e-buses and enhance payment security are crucial for accelerating sustainable transportation. Comprehensive support for the entire EV ecosystem is essential. Anticipated policy reforms like FAME-III and increased funding for critical EV segments will foster holistic industry growth," said Kartikey Hariyani, Founder and CEO, Charge Zone.

Petrol and diesel under GST

One of the frequent demands recently has been to bring petrol and diesel under goods and services tax (GST) to bring the fuel prices under control. Oil Minister Hardeep Singh Puri has said that the government will try to bring petrol and diesel under GST.

At present, the central government levies excise duty on petrol and diesel, while the state government imposes value-added tax (VAT) and sales tax.

Incentives for hybrids

While electric vehicles have long been subsidised by both state and central governments, hybrids have not received the same love. Union Minister Nitin Gadkari had earlier this year pitched for lower GST on hybrid vehicles.

“The proposal to reduce GST on hybrid vehicles to 5% and to 12% for flex engines has been sent to the Finance ministry which is considering the requisition,” Gadkari said.

Companies like Maruti Suzuki have a strong presence in hybrids and have a lot to gain from incentives, while companies like Tata Motors who do not have hybrid technology may take a hit on EV sales. With the government looking to reduce dependence on petrol and diesel cars, hybrids may finally get some incentives in the upcoming budget.

The UP government has already started offering incentives to select hybrid cars.

Vehicle scrapping

Industry bodies such as the Society of Indian Automobile Manufacturers (SIAM) have sought incentives for vehicle scrapping. These are vehicles that have crossed a certain age and are being scrapped keeping in mind the pollution.

While a policy is already in place, the stakeholders are looking for increased incentives, especially for commercial vehicles such as trucks and buses, which account for most of the emissions.

PLI scheme

Automakers are also looking for increased incentives under the Production Linked Incentive (PLI) scheme, for both ICE and EVs. Companies want the scheme to be expanded to more components, including tyres, which have seen a lot of changes.

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