Compliant with localisation norms under FAME II: Okinawa MD Sharma

Co submitted requisite documents; awaiting meeting with MHI; at an industry level subsidy worth Rs 1,500 cr held up

As the FAME II sops for electric two-wheeler makers are on hold and investigations are on against the manufacturers to ascertain whether or not they were non-compliant with the localisation norms, Gurgaon based Okinawa Autotech, one of the early entrants into this space, says that they have submitted requisite documents with the government and are now awaiting a resolution.

At the industry level, about Rs 1,500 crore worth of subsidies are on hold by the government, hitting the working capital requirements of the manufacturers, until the investigation is over to show their compliance. The pre-condition for FAME II subsidy disbursements was localisation of 51 per cent by the manufacturers.

Speaking to Business Standard, Jeetender Sharma, MD and founder, Okinawa Autotech said his firm has been compliant with the norms set by the government. “Whatever the norms guide for subsidies, we follow that – we give the subsidy to the customer through the dealers to incentivise the customer. We have also followed the localisation targets set by the government year-wise,” Sharma said.

“There were different localisation targets for different years, and then Covid-19 happened. Then some extension was allowed for one year to the industry because of the disruption caused by Covid-19. We have followed the norms made by the government and we have also submitted supporting documents during the audits.”

He added that Okinawa had submitted the required documents during the audit by the Automotive Research Association of India (ARAI) last August, and that they were satisfied with the documents submitted.

“Later on they asked for more documents and as a responsible brand, we have submitted those as well. We are waiting now for a meeting with the Ministry,” Sharma said.

“We have had a meeting with MHI, and now they are consolidating the information. We will have another meeting with the ministry at a company level and also at an industry level,” Okinawa said.

Sharma said that being an early entrant they know how to develop components locally, and thus they were also the first ones to qualify for the FAME II subsidy once it was announced in 2019 March.

He added that subsidies worth about Rs 1,500 crore have been held up by the government since last June.

However, the industry is hopeful of a positive outcome of the discussions.

“The discussions with the government are positive. We are hoping that things will be sorted out as soon as possible. We have faith in the government and we are hopeful that there will be a positive outcome,” he added.

As for the impact on the demand for electric two-wheelers after the withdrawal of the FAME II subsidies, Sharma feels the customer is now more aware about the benefits of using EVs.

“The market for electric two wheelers has stabilised and people have understood the value and benefits of using EVs. The purpose of the subsidy is to give an initial impetus. In the past 3-4 years, customers have understood the benefits of electric two-wheelers. From a 0.1-0.2 per cent share of the overall two-wheeler market three years ago, the share of electric two-wheelers is now above 5 per cent,” he said.

Sharma feels subsidy will not be the only driver of sales, as customers now understand the EV value proposition. “I expect that at an industry level, in the next 3-5 years, electric two-wheelers will constitute 20-25 per cent of the overall two-wheeler market easily,” Sharma said.

With retail financing, the impact of the subsidy withdrawal may not pinch the customer. “If for example, the cost increases by Rs 20,000, then it does not make much difference in the monthly EMIs of a customer who is going for a retail loan repayable in 3-5 years. In contrast, he makes significant savings in fuel costs,” Sharma said.  

The FAME scheme has played a key role in boosting the growth in electric vehicle sales – the government provides an incentive of Rs 15,000 per kWh for two-wheelers, capped at 40 per cent of the total vehicle cost.  

Okinawa Autotech rolled out its 250,000th electric scooter from its Alwar plant in Rajasthan on March 14. The firm, which began operations in 2015 and rolled out its first product in 2017 has taken six years to achieve the milestone.  

Okinawa currently has eight e-scooters on sale. According to the company, considering an average daily commute of 30 km and petrol at Rs 90 a litre, its total sales of 250,000 units till date would have saved 300.3 million kilograms of CO2 and Rs 1,250 crore in petrol costs.

Okinawa says submitted documents with Govt

Awaiting meeting with MHI on FAME II localisation issue

Co says compliant with localisation norms

Subsidy worth Rs 1,500 cr held up for e-2W industry

Okinawa feels e2W will be 20-25% of total 2W sales in next 5 years