Exploring the Economic, Social, and Environmental Outcomes of Subsidy Schemes for Electric Vehicles in India

The report evaluates the FAME II policy in India, finding that it generates significant net benefits by replacing internal combustion engine (ICE) vehicles with electric vehicles (EVs). Using the SAVi methodology, the analysis demonstrates that while the conventional benefit-cost ratio (BCR) remains constant at 1.58 across scenarios, the government's BCR increases as its subsidy contribution decreases. The highest cumulative net benefits (INR 1,606.90 billion) occur in the scenario with the lowest government contribution (25%), as this shifts more of the investment burden to consumers while still stimulating EV uptake. The primary drivers of these benefits are the avoided investment and operation costs of ICE vehicles and reduced fuel use, all of which are borne by users rather than the state.

• The FAME II policy is projected to deliver substantial cumulative net benefits, with the highest value of INR 1,606.90 billion occurring in Scenario 4, where the government's cost contribution is lowest at 25%.
• The most significant monetary values across all analyzed scenarios are the avoided investment costs of internal combustion engine (ICE) vehicles, followed by avoided fuel use and avoided operation and maintenance (O&M) costs of ICE vehicles.
• The conventional benefit-cost ratio (BCR) for the FAME II policy is identical at 1.58 across all four scenarios because the benefits accrued per electric vehicle sold remain constant regardless of the total investment level.
• There is an inverse relationship between the government's subsidy contribution and the resulting BCRs: as the government's share of the EV cost decreases, the BCR from the government's perspective increases, while the BCR for households and the private sector decreases.
• The FAME II policy generates additional economic benefits through employment creation in EV manufacturing, battery production, and power generation.
• Environmental benefits of the policy include avoided costs related to air pollution, carbon dioxide (CO2) emissions, and noise pollution.
• As of December 31, 2022, the FAME II program had reached 51.96% of its target for EV sales, with approximately 70% of the total allocated funds remaining to be utilized.

APA

Kapetanakis, M., & Bassi, A. M. (2024). Exploring the Economic, Social, and Environmental Outcomes of Subsidy Schemes for Electric Vehicles in India. International Institute for Sustainable Development. https://www.iisd.org/system/files/2024-02/savi-electric-vehicles-india-fame-policy.pdf

Chicago

Kapetanakis, Michail, and Andrea M. Bassi. Exploring the Economic, Social, and Environmental Outcomes of Subsidy Schemes for Electric Vehicles in India. International Institute for Sustainable Development, 2024. https://www.iisd.org/system/files/2024-02/savi-electric-vehicles-india-fame-policy.pdf.

Wikipedia

{{cite report |last1=Kapetanakis |first1=Michail |last2=Bassi |first2=Andrea M. |title=Exploring the Economic, Social, and Environmental Outcomes of Subsidy Schemes for Electric Vehicles in India |publisher=International Institute for Sustainable Development |date=January 2024 |url=https://www.iisd.org/system/files/2024-02/savi-electric-vehicles-india-fame-policy.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{kapetanakis2024exploring, author = {Kapetanakis, Michail and Bassi, Andrea M.}, title = {{Exploring the Economic, Social, and Environmental Outcomes of Subsidy Schemes for Electric Vehicles in India}}, institution = {International Institute for Sustainable Development}, year = {2024}, month = jan, url = {https://www.iisd.org/system/files/2024-02/savi-electric-vehicles-india-fame-policy.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }