FAME Compliance Requirements for EV OEMs

Introduction

The Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme has been the backbone of India's electric mobility revolution. For OEMs manufacturing electric two-wheelers (2W) and three-wheelers (3W), FAME compliance is not just about availing subsidies—it is about building vehicles that meet national safety, quality, and localization benchmarks. As an EV technologist, I have seen many manufacturers struggle with documentation, testing, and ongoing reporting. This guide distills the practical, technical, and operational essentials every OEM needs to know to stay compliant and competitive.

What is FAME and Why Does It Matter?

Launched by the Ministry of Heavy Industries (MHI), FAME India aims to promote EV adoption by offering demand incentives to buyers and production-linked support to manufacturers. For 2W and 3W OEMs, FAME II (and its extended phases) provide per-vehicle subsidies that significantly reduce the end-user price. However, claiming these incentives requires strict adherence to eligibility norms, phased localization targets, and homologation standards. Non-compliance can lead to subsidy clawbacks, penalties, or even debarment from the scheme.

Eligibility Criteria for OEMs

To participate in the FAME subsidy program, an OEM must meet several baseline conditions:

• Be a registered company in India with a valid GST and PAN.
• Have a manufacturing facility (or contract manufacturing agreement) located within India.
• Ensure the vehicle model is homologated and certified by designated testing agencies (e.g., ARAI, ICAT).
• Meet the minimum localization percentage as per the Phased Manufacturing Programme (PMP).
• Provide a bank guarantee or performance security as specified by MHI.
• Submit a detailed project report and investment roadmap for EV production.

Documentation and Application Process

The application process for FAME registration involves multiple layers of documentation:

1. Company incorporation certificate and director details.
2. Manufacturing facility address, layout, and machinery list.
3. Proof of investment in EV-specific R&D and production lines.
4. Homologation certificates for each vehicle model (including AIS-048 or AIS-156 for batteries).
5. Localization declaration with component-wise sourcing details.
6. Undertaking on compliance with safety, quality, and after-sales service norms.
7. Bank guarantee of ₹2.5 crore per model (or as per MHI notification).

Applications are submitted through the online portal of the Ministry of Heavy Industries. Once approved, the OEM receives a registration number and can begin claiming subsidies against eligible models sold.

Localization (Phased Manufacturing Programme) Requirements

One of the most critical aspects of FAME compliance is the Phased Manufacturing Programme (PMP). The PMP mandates increasing levels of domestic value addition over time, particularly for battery packs, motors, controllers, and power electronics. For 2W and 3W OEMs, the current localization norms are:

OEMs must submit quarterly localization reports to MHI, certified by a chartered accountant. Failure to meet targets can reduce the subsidy amount on a pro-rata basis or disqualify the model from the scheme.

Technical and Safety Compliance (Homologation)

All EV models under FAME must undergo rigorous testing at approved agencies like ARAI, ICAT, or iCAT. Key tests include:

• Performance testing (acceleration, gradability, top speed).
• Braking and stability tests under various load conditions.
• Electrical safety tests (insulation resistance, creepage distances).
• Battery pack safety tests (thermal runaway, overcharge, short-circuit).
• EMI/EMC compliance as per AIS-004.

The homologation process typically takes 3–6 months, so OEMs should plan their product development cycles accordingly.

Battery Testing and Certification Standards

Batteries are the heart of any EV, and FAME places special emphasis on their safety and performance. All battery packs must comply with AIS-048 (for L-category vehicles) or AIS-156 (the latest standard incorporating UN R136 and UL 2580). Key certification requirements include:

1. Thermal propagation test – to ensure a single-cell failure does not cause a full pack fire.
2. Vibration and mechanical shock tests – simulating real-world road conditions.
3. Water immersion and IP rating verification (minimum IP67 recommended).
4. Cycle life testing – to guarantee at least 70% capacity retention after 500 cycles.
5. BMS functionality verification – overvoltage, undervoltage, overcurrent, and temperature cutoffs.

OEMs must provide test reports from NABL-accredited labs. It is advisable to engage with testing agencies early in the design phase to avoid costly rework.

Post-Subsidy Monitoring and Reporting

FAME compliance does not end with model approval. OEMs have ongoing obligations:

• Monthly sales and subsidy claims submission through the online dashboard.
• Quarterly localization progress reports with supporting invoices and bills of entry.
• Annual audit by MHI-appointed agencies to verify production and sales records.
• Maintenance of a minimum service network (one service center per 100 vehicles sold).
• Real-time telematics data sharing (if required under future regulations).

MHI conducts random inspections and can demand proof of localization at any time. OEMs must keep meticulous records for at least 5 years.

Common Pitfalls and How to Avoid Them

Over my years of working with EV manufacturers, I have observed recurring challenges that delay or derail FAME compliance:

• Underestimating the lead time for homologation – start testing at least 6 months before commercial launch.
• Overlooking the battery cell localization requirement – many OEMs import cells and fail to meet PMP targets.
• Submitting incomplete documentation – ensure all annexures and supporting proofs are attached.
• Ignoring after-sales service obligations – a sparse network can lead to subsidy suspension.
• Not updating records when sourcing changes – any supplier change must be reported immediately.

Compliance is not a one-time event; it is a continuous process embedded into your manufacturing and supply chain operations. Treat it as a strategic advantage, not a burden.

Operational Best Practices for Compliant Manufacturing

To streamline compliance and reduce operational overhead, OEMs should adopt:

1. A dedicated compliance team that liaises with MHI, testing agencies, and internal departments.
2. Digital documentation systems for real-time tracking of localization, sales, and service records.
3. Supplier development programs to help local vendors meet quality and localization requirements.
4. Regular internal audits (monthly/quarterly) to identify gaps before official inspections.
5. Continuous training for production and quality staff on FAME norms and safety standards.

Investing in these practices not only ensures compliance but also enhances product quality, reduces warranty costs, and builds brand trust among buyers.

Impact on Cost Economics and Pricing

FAME subsidies can reduce the ex-showroom price of a 2W EV by ₹15,000–₹20,000 and a 3W EV by ₹50,000–₹70,000, making them competitive with ICE vehicles. However, the cost of compliance—including homologation fees, bank guarantees, testing, and localization investments—can range from ₹2 crore to ₹5 crore per model. OEMs must factor these costs into their pricing strategies. For fleet owners and buyers, understanding that a FAME-compliant vehicle offers certified safety and quality is a strong value proposition.

Case Studies: Successful FAME-Compliant 2W and 3W OEMs

Several Indian OEMs have successfully navigated the FAME compliance journey:

• Ola Electric – achieved over 70% localization for its S1 series, with a vertically integrated battery pack facility.
• Bajaj Auto – leveraged its supply chain to meet PMP targets for the Chetak EV, while maintaining AIS-156 compliance.
• Mahindra Last Mile Mobility – its Treo 3W range achieved full homologation and has been a top seller under FAME II.
• TVS Motor – integrated local cell sourcing and BMS development to meet localization norms for the iQube series.

These OEMs have also leveraged FAME subsidies to offer competitive financing and attractive lease options for fleet operators, driving B2B adoption.

Future of FAME and EV Policy in India

While FAME II is currently the operative framework, the government has signaled a transition to a more technology-agnostic and performance-linked incentive system. Upcoming changes may include:

• Higher localization targets (up to 70–80% for battery cells).
• Mandatory battery second-life utilization and recycling requirements.
• Integrated telematics and real-time data sharing for all FAME-approved vehicles.
• Carbon credit trading and green certification incentives for compliant OEMs.

OEMs should treat FAME compliance as a stepping stone to global competitiveness, not just a domestic subsidy program.

Conclusion

FAME compliance is a comprehensive, multi-year commitment that touches every aspect of an EV OEM's operations—from design and sourcing to sales and service. For 2W and 3W manufacturers in India, mastering this framework is essential for accessing subsidies, building consumer trust, and scaling sustainably. As the EV ecosystem evolves, compliance will only become more rigorous. My advice to OEMs is to embed compliance into the company's DNA, invest in local partnerships, and view each regulatory requirement as an opportunity to improve product quality and operational excellence. For buyers and fleet owners, choosing a FAME-compliant vehicle is a smart, future-proof investment.