India’s electric vehicle (EV) landscape is undergoing a major transformation in July 2025 with the official rollout of the third phase of the FAME (Faster Adoption and Manufacturing of Electric Vehicles) scheme. The latest round, FAME 3, is designed to correct previous inefficiencies, extend benefits to a broader audience, and push India closer to its 2030 electrification targets. This update focuses not only on private EV buyers but also on strengthening the supporting infrastructure and local manufacturing ecosystem.
What’s Different in the FAME 3 Scheme?
The FAME 3 scheme introduces a tiered incentive structure, shifting away from the blanket subsidies seen in earlier phases. Now, incentives are calculated based on vehicle category, battery capacity, and localization levels of components. This encourages automakers to increase domestic content and reduce dependency on imports. For instance, electric two-wheelers with over 50% localized components now receive a higher subsidy compared to imported models.
Updated Electric Vehicle Incentives in July 2025
The government has revised electric vehicle incentives under FAME 3 to better align with real-world usage and cost structures. Here’s a summary of the new benefit structure:
| Vehicle Category | Previous Subsidy (FAME 2) | New Subsidy (FAME 3) | Key Change |
|---|---|---|---|
| Electric Two-Wheelers | ₹6,000 – ₹10,000 | Up to ₹12,000 | Higher for locally made components |
| Electric Three-Wheelers | ₹1.5 lakh | ₹1.8 lakh | Extended support for cargo EVs |
| Electric Buses | ₹50 lakh | ₹60 lakh | Better incentives for intercity buses |
| Electric Cars (Fleet) | ₹1.5 lakh | ₹2 lakh | Prioritization of ride-sharing fleets |
The India EV subsidy changes 2025 are crafted to support market segments with the highest potential for emissions reduction.
Strategic Shifts and Policy Alignment
FAME 3 doesn’t exist in a vacuum—it integrates with other national initiatives like the Production Linked Incentive (PLI) scheme for advanced chemistry cell (ACC) batteries and the PM-eBus Seva program. The objective is to create a tightly knit ecosystem where EVs, charging infrastructure, and supply chains grow in unison. Notably, subsidies are now linked to vehicle registration and performance standards, which means automakers must meet minimum efficiency thresholds to qualify.
Focus on Tier 2 and Tier 3 Cities
Another key focus of the India EV subsidy changes 2025 is expanding the benefits beyond metro cities. FAME 3 reserves 40% of its budget for initiatives in Tier 2 and Tier 3 cities. These include establishing public charging hubs, retrofitting old diesel buses, and subsidizing electric auto-rickshaws. By decentralizing its focus, the scheme aims to trigger EV adoption in regions where infrastructure has traditionally lagged.
Challenges Ahead and Industry Reaction
While the FAME 3 scheme is ambitious, stakeholders have raised concerns over bureaucratic delays and approval processes. Automakers are pushing for faster disbursal mechanisms and clearer guidelines on localization metrics. Still, industry sentiment remains optimistic. With nearly ₹70 billion allocated to the program, the potential for market expansion and innovation is considerable.
Conclusion
India EV subsidy changes 2025 under the FAME 3 scheme mark a turning point in the country’s push toward sustainable mobility. With smarter subsidies, broader coverage, and strong policy alignment, the program is poised to accelerate EV adoption while nurturing the domestic EV ecosystem. Whether you’re a manufacturer, a fleet operator, or an everyday commuter, the new incentives offer compelling reasons to go electric this year.
FAQ on India EV Subsidy Changes 2025
What is the FAME 3 scheme?
The FAME 3 scheme is the third phase of the government’s initiative to promote electric vehicles in India, launched in July 2025.
Who can benefit from electric vehicle incentives under FAME 3?
Private buyers, fleet operators, public transport agencies, and EV manufacturers can all benefit, provided the vehicles meet localization and performance criteria.
Are there new incentives for electric two-wheelers?
Yes, electric two-wheelers with over 50% localized parts now receive up to ₹12,000 in subsidies.
How is FAME 3 different from FAME 2?
FAME 3 uses a tiered and performance-linked incentive model, with greater focus on domestic manufacturing and regional equity.
Does FAME 3 cover charging infrastructure?
Yes, FAME 3 includes provisions for establishing public charging stations, especially in smaller cities and semi-urban areas.
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