E-vehicle maker body asks for resolution of Fame II to salvage ‘EV revolution’

The Society for Indian Electrical Vehicle Manufacturers (SMEV) has made a fresh petition to the Parliamentary Standing Committees on Industry and Estimates in which it warns that electric vehicle (EV) adoption has slowed down due to the financial stress in the industry. This stress, the petition says, has occurred because the Fame II subsidies have been delayed for more than a year. This is the seventh petition sent by SMEV after the Fame II subsidies were stopped.

Autocar Professional has a copy of the petition. As it has said in earlier statements, in this letter too, SMEV has claimed that the subsidies, and consequently India’s electric vehicle adoption, have got derailed by emails that the industry body claims are fake and sent by parties ‘with vested interests.’

Current trends indicate that EV adoption is indeed slowing in the country. In FY23, India’s electric two-wheeler sales totalled 8,46,976 units, falling more than 1.5 lakh short of the one million target set by Niti Aayog. However, the overall Indian EV industry has passed the one-million mark, with total industry sales at 11,52,021 units total, which included e-buses, e-cars, e-three-wheelers and e-two-wheelers representing a 58 percent increase in sales in FY23 over EV sales in FY22.

The SMEV says that this drop is due to the working capital of the OEMs being squeezed. “For the OEMs that have passed on the subsidies to customers this delay has hugely squeezed their working capital resulting in substantial drop in the industry volumes vis-a-vis target. The monies due as subsidies have not been received as yet by OEMs while they have passed it on to customers. In effect, the Department is in debt to the OEMs.”

Addressing one of the main issues why the subsidies were halted, the petition states, “The basis of the delay has been proven to be mischievous emails alleging non-adherence to policy norms as regards localisation targets… Most of the debate on localisation — the prime misdemeanours held against OEMs so far — is a matter of degrees and a subject of minor last three years to secure local parts that adhere to quality standards but have achieved localisation to greater or smaller degree providing for availability.”

According to the industry body, two previous committee reports, the first, evaluating India’s EV performance, led by the late Member of Parliament Girish Bapat, and the second, Parliamentary Committee on Heavy Industries, led by MP Tiruchi Siva, jointly advocated for the continuation of Fame II subsidies beyond their current expiry date of March 2024 for another two years for India to meet the Niti Aayog target of two million EVs by the end of FY24. The EV industry’s apex body has acknowledged the findings of the two committees, which agree that Fame II subsidies deserve credit for fostering the EV revolution.

Pointing to the way forward, SMEV noted that “the need of the hour is for the government and the industry to work together to resolve issues and put India back on track to meet its E Mobility targets.”