The Society of Manufacturers of Electric Vehicles (SMEV), the apex body representing the electric vehicle industry in India has now petitioned the National Green Tribunal (NGT) expressing concerns about the revision in FAME 2 subsidies for electric two-wheelers by the Ministry of Heavy Industries (MHI).
It says that this move is likely to disrupt India’s growth in the EV sector and consequently have a detrimental impact on the environmental and health indices of the country.
This move comes a week after SMEV had written to MHI to levy Green Tax on petrol two-wheelers that would encourage people to look at their electric counterpart. It had also asked for setting up of a Rs 3,000 crore Rehab fund for EV makers affected due by the stalling of FAME 2 subsidy.
The Ministry of Heavy Industries (MHI), assigned with the mandate to implement the FAME 2 programme in the country and specifically to induce mass transport shift towards E-mobility, has suddenly decided to cut down subsidies by 75 percent.
“It needs no emphasis to illustrate that this decision flies in the face of almost every expression of intent by the government to clean the air of pollutants, reduce pollution per se, reduce dependence on fossil fuels or carcinogenic by-products of such fuels. It also contravenes almost every international covenant that the government has become a signatory to. It also contradicts the efforts of the government to provide a fundamental right to breathe clean air and provide protect against health hazards caused by pollution,” the strong worded letter states.
Ajay Sharma, Secretary General, SMEV said, “At a time when the world has barely recovered from the onslaught of the lung-affecting Covid malaise, to allow such a policy U-turn is to play with health of the country. Electric vehicles are subsidised across the world with the intent to induce a mass shift towards non-polluting energy systems. The Ministry’s decision is contrary of this consciousness and an anomaly that defies logic or law especially, as the EV manufacturers were emboldened to shift technologies, work force, capital and enterprise towards this sector based on the support expressed by the government.”
As per SMEV estimates many OEMs are unable to cope with the financial stress caused by actions of the MHI as subsidies amounting to over Rs 1,200 crore have been held up and further demands of retrospective payback of subsidies given in 2019 has been made.
In fact, it is a matter of time until they shut shop due to lack of working capital, loss of investor and bank support, delay in production timelines and a rapidly vanishing distribution network.
The cumulative effect of this has been devastating on start-ups and first movers in the electric two-wheeler segment. To top it all, it says the Heavy Industry Ministries decision to further reduce the subsidies starting June 2023. This might cause the EV sector to slip into a freefall as the rising cost of EVs will make the transition from tradition fuel-based vehicles to EVs extremely challenging.
SMEV says that the introduction of Green Tax aligns with the three key objectives of the government, namely: reducing fossil fuel usage, phasing out polluting vehicles, and significantly improving the health indices of national population.
