CBITA sends letter to MHI against clawing back subsidies from OEMs

CBITA has written a letter to the Minister of Heavy Industries, against clawing back subsidies from OEMs.

cbita letter for fame ii

The Centre for Business, Industry & Trade Advocacy (CBITA), an issue-based advocacy group that assists global businesses and industries, navigates policies, processes and the environment in India, has written a letter to the Minister of Heavy Industries, against clawing back subsidies from OEMs.

The letter from Aishwarya Gupta, the Counsel for the Committee on Electric Mobility, CBITA, addressed to MN Pandey, the Minister of Heavy Industries read:

The action taken by the Ministry of Heavy Industries (MHI) against OEMs to claw back earlier subsidies is tantamount to the complete collapse of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME II) subsidy.

  • Having missed targets by 50%, FAME II is now gearing for a failure of almost 85% in target achievement.
  • The latest action of penalties on OEMs will conclude that the MHI disbursed literally no funds under the FAME II scheme since 2019.
  • FAME II will achieve the dubious distinction of being the only Government Scheme since independence to have been financed by private funds.

We have observed with concern over the last few months that the developments in the EV sector are indicative of strange contradictions.

The Department has slapped 4 OEMs with 100 odd crores as a penalty other than asking them to return the monies collected from customers as a punishment for breaching the 1.5 lakh rupee threshold.

Meanwhile, it has issued similar demands to other OEMs who have no such matter of dispute but an earlier pending case of non-compliance with PMP norms.

Should the MHI be able to claw back the amounts from these OEMs on the pretext of subsidies issued before it received the alleged complaints, it would be tantamount to the Ministry having disbursed almost no subsidies at all.

In effect, the recent correction issued by the SMEV – that the MHI achieved only 50% of its mandated target would shrink to probably just 15% achievement if this subsidy is also withdrawn.

It would mean that the MHI has literally given no subsidy to the OEMs since inception: while having them pass on the subsidy to the tune of 2000 crores to the customers from their own pockets.

Which brings into question the purpose and meaning of the FAME policy; and whether the MHI has any role to play in the growth of the EV sector since the last four years at all.

I trust you will see the points made above and take steps for immediate course correction.

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First published on: 26-05-2023 at 18:23 IST