The Society of Manufacturers of Electric Vehicles has petitioned NITI Aayog, the country’s premier policy-think tank to reiterate that the implosion of the Faster Adoption and Manufacturing of Electric Vehicles (FAME) 2 policy, in a series of detrimental actions since last year that has contaminated the ambitious national e-mobility charter resulting in a complete regression of its objectives.
The EV body says the Ministry of Heavy Industries (MHI) actions over the past 18 months – withholding subsidies, demanding retrospective claw backs of subsidy given in 2019, delisting companies from NAB portal, and now its latest move to slash subsidies, is likely to impact sales and substantially delay the process of EV adoption and penetration in the country.
It has pointed out that the situation has created a state of disequilibrium in the market given that there is no more a level playing field in the automotive sector. The MHI’s decision to blockade subsidy flow to OEMs has seen the demise of existing market leaders at the expense of legacy players. Start-ups are being punished. Four of the top EV producers since 2018- 2020 have been relegated to bottom four today.
The direct and indirect impact of blocking subsidies to OEMs who had paid these out diligently to customers is plain to see: the OEMs are struggling to stay afloat; investors are wary; banks are withdrawing; employees are fleeing; debts are rising, and closures are the next imminent step.
Sohinder Singh Gill, Director General, SMEV said, “The triple whammy of subsidy blockade, claw back notices and embargo on future sales are sabotaging the FAME 2 policy. It is evident that the e-mobility ambitions of the country have been impacted as the scheme could not make-up even 50 percent of its mandated target over 5 years, since 2019. The deterioration of FAME 2 and the deviation from the Niti Aayog’s vision raise questions about the intended mass movement that was envisioned for e-mobility.”
Gill added that there was a specific deleterious impact of squeezing out mass market leaders has been that low-end commuter scooters have lost out to the premium segment.
“In a contrarian effect, not seen elsewhere, the FAME scheme has spawned a spurt in the premium EV bikes at the cost of commuter scooters.”
SMEV shared that the current state of affairs reflects a corrosive transformation into an elitist program, neglecting the principles of inclusivity and accessibility. It says it was disheartening to witness how these policy initiatives have transformed from a progressive and inclusive movement into an elitist pitch, deviating from the very essence of NITI Aayog’s prescriptions.
A few days ago, SMEV proposed that MHI could implement a 10% green tax on IC-two-wheelers to offer some balance to the field. But this alone was not enough. The OEMs are doddering under the weight of the triple whammy of subsidy blockades, claw back notices and an embargo on future sales under FAME.
Considering India’s commitment to zero carbon emissions, its G20 presidency, the pressing challenges of air pollution, the urgent need to combat climate change, and the imperative of public health, it is essential that EV adoption be pursued with utmost urgency and determination. Unfortunately, the recent developments have hindered the aggressive pursuit of EV adoption, impeding progress towards the aforementioned goals.
Through the letter SMEV says it wishes to express its admiration for the work undertaken by NITI Aayog that provided the initial thrust to India’s transition from ICE to EVs. It is in this spirit that the Association has implored NITI Aayog to re-evaluate the current state of FAME 2 policy and realign these initiatives with the original intent of serving as a catalyst to a mass movement towards sustainable transportation.
