Unpaid subsidies worth Rs 1,200 cr leading to liquidity crisis: SMEV

Call for the industry and the government to work together to solve the issues

Weeks after the Parliamentary Standing Committees on Industry and Estimates asked for a resolution and revival of the e-mobility revolution in India and recommended continued patronage of the FAME II policy. The industry body for electrical manufacturers — Society of Manufacturers of Electric Vehicles (SMEV) — in a petition sent out to the Committees on Tuesday said it might be too late.

The industry body claims that Rs 1,200 crore worth of subsidies has been withheld, causing a serious liquidity crisis in the industry, which is holding up the industry despite the supply chain being ready.

In its petition, the SMEV while highlighting how the unpaid subsidies are killing the EV revolution in the country said, “Current trends are showing a slowing down of EV adoption due to the financial stress for the industry, which has been besieged by irritants designed to disturb the momentum of FAME II.”

The allegations come close on the heels of the electric two-vehicle segment missing its one million unit sales target for the financial year 2023.

Though the electric two-wheeler (E2W) segment contributed 61 per cent to the overall electric vehicle sales of 1,177,938 units, it fell 28 per cent short of the targets set by the Niti Aayog.

The subsidy of several original equipment manufacturers (OEMs) are on halt on the pretext of delay in the localisation, a claim that the SMEV challenges.

In its petition to the parliament standing committees SMEV argues that the EV revolution got derailed by fake emails sent to the ministry alleging non-adherence to FAME policy norms as regards localization targets.

“The charge of misappropriation has since been found to be misplaced because 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,” SMEV said.

Talking about the other challenges faced by the OEMs, the industry body highlighted the disruptions caused by Covid-19 for two years.

SMEV in its petition said that the MSMEs got reprieves for Covid years, however, EV startups got nothing.

“Most industries have been granted a reprieve in lieu of the Covid years and the EV sector must also be similarly considered. Also worthy of note is that the industry kept the ministry (ministry of heavy industries) in the loop on difficulties of procurement.,” SMEV said.

While underscoring the importance of FAME in revolutionising the EV sector and preparing the market to take off in full swing, the industry body said that the Ministry was reasonable to offer extensions continually – until the intervention of some vested interest parties that wished to scuttle the FAME scheme.

SMEV has called for the industry and the government to work together to solve the issues and put the country back on track to meet its e-mobility targets.

“The need of the hour is for the govt and the industry to work together to resolve issues and put India back on track to meet its E Mobility targets,” SMEV said.