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State-wise Electric Vehicles (EV) Subsidies

  • Author :
  • TATA AIG Team
  • Published on :
  • 21/04/2023

Subsidies on electric vehicles (EVs) have been introduced in India as a means to promote clean and green transportation. The Indian government has been actively promoting EV use by offering various subsidies, tax exemptions, and incentives to manufacturers and buyers.

A government subsidy for electric vehicles has helped manufacturers set up EV manufacturing plants for research and development in the EV sector.

Additionally, the government has set up an investment promotion cell that supports the EV industry by addressing their concerns and providing them with necessary information. In this blog, let’s learn more about electric vehicle subsidies.

What is the FAME Subsidy?

The Indian government has set up an electric vehicle scheme in India called the Faster Adoption and Manufacturing of Electric Vehicles (FAME) to promote the use of EVs. The EV subsidy scheme provides incentives for setting up charging infrastructure, providing financial support for R&D in the EV sector, and promoting the adoption of EVs among government departments and public sector undertakings.

The FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) scheme in India has two phases: FAME I and FAME II.

FAME I was launched on April 01, 2015, and aimed to support the adoption of electric and hybrid vehicles in India by providing subsidies on the purchase of such vehicles. This phase was extended up to March 31, 2019. The FAME scheme is based on the Demand Incentive Disbursement Mechanism, and the EV subsidy for every vehicle category (pure electric, hybrid, etc.) is decided on the basis of the battery and technology specifications. On April 01, 2019, an expanded version of the original scheme called FAME II was launched and focused on developing the electric vehicle ecosystem in India, including the development of charging infrastructure, R&D, and supporting the manufacturing of electric components.

Under FAME 2, electric vehicle subsidy in India is provided for electric two-wheelers, three-wheelers, and four-wheelers, along with electric buses. Lately, under this phase, the EV subsidy scheme has been extended until March 2024, and the maximum incentive for an electric car is ₹1.5 lakhs.

FAME I and FAME II aim to promote the use of electric vehicles in India to reduce the country's dependence on fossil fuels and lower emissions.

State-wise Subsidy on Electric Cars

In addition to subsidies, the government has also provided tax exemptions for EVs. The Goods and Services Tax (GST) on EVs is reduced to 5% compared to the standard GST rate of 18% for other vehicles. Furthermore, road tax on EVs is also reduced or waived in some states, providing further savings to the buyer.

How to Avail of the FAME Subsidy in India?

Here is a step-by-step guide to availing of the FAME subsidy for electric vehicles:

  • Eligible Electric Vehicle: The first step is to purchase an electric vehicle eligible for the FAME subsidy. It is essential to check the list of eligible vehicles before making a purchase.
  • OEM Registration: To avail of the subsidy, the Original Equipment Manufacturer (OEM) should be registered for the FAME scheme. Only registered OEMs are eligible to offer the subsidy.
  • Price Quotation: The dealer will quote the price after deducting the subsidy amount when purchasing an eco-friendly vehicle. For example, if the price of an EV is ₹1 lakh and the subsidy amount is ₹30,000, the dealer may quote a cost of ₹70,000.
  • Purchase Details: The dealer will forward the purchase details to the OEM after the purchase is complete.
  • Monitoring Body: The OEM will then forward the purchase details to the National Automotive Board (NAB), which monitors the FAME subsidy scheme.
  • Verification: After the NAB verifies the purchase details, the subsidy amount is credited to the OEM.
  • Subsidy Amount: The OEM will then credit the subsidy amount to the dealer, who will reduce the vehicle's cost by the subsidy amount. This cost reduction will be reflected in the price that the customer pays.

It is simple to get a subsidy on your electric vehicle if you follow the due process as given above.

Can Electric Vehicles be Secured with Insurance?

Electric vehicles, like their counterparts, can and should be protected with insurance coverage. Hence, a car insurance policy is essential if you have an electric car. In fact, the insurance for your four-wheeler EV can be customised with Tata AIG. You can choose the appropriate coverage for your vehicle by using the Tata AIG car insurance calculator, which is also useful for calculating reasonable car insurance premiums.

As a result, you can protect your EV against financial losses in case of accidents, theft, or other damages. While there are various types of EV car insurance coverage policies that you can choose from, comprehensive insurance for your 4-wheeler can save you from several financial losses and damages to your car, along with third-party liability protection and more!

Moreover, remember to renew your car insurance policy on time so your electric car can always enjoy uninterrupted insurance coverage from uncertain risks and damages.


A range of measures taken by the Indian government aim to reduce the upfront cost of EVs and make them more affordable for the general public. Do note that the subsidy amount and the list of eligible vehicles under the government subsidy vehicle scheme may change based on government policies and regulations. This is why you should check with the dealer and the OEM for the most up-to-date information on the subsidy before making a purchase.

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