Electric vehicle manufacturers have sought a restoration of subsidy meant for promoting sale of vehicles. The companies have said that the move to unilaterally stop subsidy will ‘choke the very life breath of the industry.’
In a letter to the centre, the Society of Manufacturers of Electric Vehicles (SMEV) has said that the Ministry of Heavy Industries has blocked subsidy disbursal to almost all the major electric two-wheeler manufacturers, leading to an unprecedented situation.
The industry body has suggested forming a committee to look into this situation and resolve it before ‘declarations of closure start coming out in public.’
Subsidies worth Rs 1100 crore meant for promoting electric vehicles in the country have been blocked by the centre after it was alleged that manufacturers are not adhering to localisation norms. The goal of the FAME was to promote sale of electric vehicles. Under the present model, the subsidy is credited to the EV makers after the vehicles are sold.
“This cannot be sustainable and many of the manufacturers will collapse…to unilaterally stop subsidy is to choke the very life breath of the industry,” the letter said.
SMEV alleges that the Rs 1100 crore held back by the Heavy Industries Ministry has already been disbursed to consumers under the Faster Adoption and Manufacturing of Hybrid & Electric Vehicles (FAME) in India scheme.
In October this year, the centre had sent notices to a set of EV makers to check if the components used in their vehicles are largely locally sourced as they avail benefits provided under the Rs 10,000 crore FAME-II scheme. The subsidy that was given to the EV companies after the sale of these vehicles was also stopped pending the investigation.
While EV makers initially skirted the issue, they have recently been vocal about how the localisation norms specified under the FAME scheme are not feasible in the near term.
“At the core of the problem is the Department’s inexplicable behaviour vis-à-vis the localisation norms against target dates which, everyone is aware, received a severe setback due to the two years of COVID black outs,” the letter said.
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