A lobby of electric vehicle (EV) makers has urged the government to release the subsidy due on the units already sold to customers and said that selling electric two-wheelers without subsidy will push its members to the brink of a financial collapse.
The FAME-2 subsidies of two members of the Society of Manufacturers of Electric Vehicles (SMEV) — Hero Electric and Okinawa Autotech — have been completely stopped by the Centre’s department of heavy industries. Subsidies of other manufacturers have also been partially held back.
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While the government has not provided a clear explanation for discontinuation of the subsidies, which range from ₹17,000 to ₹55,000 per electric two-wheeler, the affected companies state that flouting of the localisation norms for EV production by some of the manufacturers is to blame for the move.
“The department (of heavy industries) has blocked subsidy disbursement to almost all major manufacturers. Over ₹1,100 crore of the subsidy, which has been passed on to consumers, remains blocked at the department level,” SMEV said in its letter sent to Krishan Pal Gurjar, minister of state, department of heavy industries.
While the subsidy was stopped in April, the affected companies continued to provide the subsidy to customers in the hope that they will eventually get reimbursed by the government. The government, however, stepped up its crackdown on the sector through repeated audits and checks to identify the erring companies.
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In October this year, the government sent notices to select EV makers who avail the benefits provided under the ₹10,000-crore FAME-2 scheme to ascertain the level of localisation (percentage of auto parts sourced from within India) they employ.
Dealers of Hero Electric and Okinawa, which were running out of stocks last year, are offering their models at discounts. Subsidies are still being given out by the affected companies to customers on existing stocks, increasing the financial burden on many of such affected companies, mostly comprising startups.
“This cannot be sustainable in practical terms. Many of the manufacturers will collapse. We have time and again tried to make it known to the department that it is punishing the wrong entities. To unilaterally stop subsidy is to choke the very life breath of the industry,” SMEV further said.