Heavy Industry Ministry Blocking Rs 1100 Cr in Subsidies: EV Group

The producers of electric vehicles have requested the reinstatement of a subsidy intended to encourage the sale of vehicles. The industry will be “choked to death” by the unilateral decision to discontinue subsidy, according to the corporations. The plea comes even as FAME 2 subsidies made an explicit push to target public transportation and EV infrastructure, and even state level subsidies have been reduced to the first few hundred or thousand private vehicles in most cases.

The Ministry of Heavy Industries allegedly suspended subsidy payments to nearly all of the main makers of electric two-wheelers, creating an unprecedented scenario, according to a letter from the Society of Manufacturers of Electric Vehicles (SMEV) to the government.

A committee should be established to investigate the matter and find a solution before “declarations of closure start pouring out in public,” according to the industry association.
The center has denied subsidies worth Rs 1100 crore intended to promote electric vehicles in the nation due to allegations that manufacturers are not abiding by localization standards. The FAME guidelines aimed to encourage the purchase of electric automobiles. The current model credits the manufacturers of EVs with a subsidy when the vehicles are sold.

The letter stated that to unilaterally eliminate subsidies is to suffocate the industry’s essential life force.

According to SMEV, consumers have already received payments from the Rs 1100 crore that the Heavy Industries Ministry had withheld as part of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) in India program.

As many EV manufacturers make use of the incentives offered under the Rs 10,000 crore FAME-II plan, the center addressed notices to them in October of this year asking them to confirm that the majority of the components used in their vehicles are sourced locally. Following the sale of these vehicles, the subsidies offered to the EV firms were also suspended awaiting the investigation.

A key issue that is likely to become a matter of ‘spirit’ versus actuals is localisation, which seems to have been delayed due to the covid related lockouts, unfortunately something the industry did not clarify or settle with the government earlier. The result is that government officers following the letter of the law might be well within the rules to hold back subsidies, if slippages have occurred, as seems to be the case here.