The Society of Manufacturers of Electric Vehicles (SMEV), representing Indian electric vehicle manufacturers, has formally requested the Niti Aayog to reconsider the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) II subsidy scheme. This appeal comes in response to a series of actions taken by the Ministry of Heavy Industries over the past 18 months, which SMEV believes are detrimental to the electric vehicle (EV) industry.
One of the main concerns raised by SMEV is the withholding of subsidies, demanding retrospective clawbacks of subsidies granted in 2019, delisting companies from the NAB portal, and a recent move to reduce subsidies. These actions are expected to have a significant impact on EV sales and could substantially slow down the adoption of electric vehicles in India.
SMEV highlights that these measures have disrupted the market, creating an imbalance in the automotive sector. The consequences are clear: OEMs (original equipment manufacturers) are facing financial difficulties, investors are becoming cautious, banks are retracting their support, employees are leaving, debts are mounting, and business closures appear imminent.
Sohinder Singh Gill, Director General of SMEV, expressed his concerns, stating, “The triple whammy of subsidy blockade, clawback notices, and embargo on future sales are sabotaging the FAME 2 policy. It is evident that the E-Mobility ambitions of the country have been impacted, as the scheme could not make up even 50% of its mandated target over 5 years, since 2019. The deterioration of FAME II and the deviation from Niti Aayog’s vision raise questions about the intended mass movement that was envisioned for E-Mobility.”
He further pointed out that one specific negative outcome of squeezing out mass-market leaders is that low-end commuter scooters are losing ground to the premium segment. This unintended consequence has seen a surge in premium electric bikes at the expense of commuter scooters, which goes against the original goals of the FAME scheme.
SMEV has suggested to the Indian government, through the Finance Ministry, that imposing a 10% green tax on polluting two-wheelers could help rebalance the situation. Given India’s commitment to achieving zero carbon emissions, its G20 presidency, the urgent need to combat air pollution and climate change, as well as public health concerns, it is crucial to prioritize and expedite EV adoption. Unfortunately, recent developments have hindered the aggressive pursuit of EV adoption, impeding progress towards these critical goals.
In its letter to the Niti Aayog, SMEV expressed its appreciation for the initial efforts that paved the way for India’s transition from internal combustion engine (ICE) vehicles to EVs. The association has urged the Niti Aayog to reevaluate the current state of the FAME II policy and align these initiatives with their original intent as catalysts for a mass movement toward sustainable transportation.
SMEV’s petition highlights the challenges facing the EV industry in India and calls for policy adjustments that can promote electric mobility and help the nation achieve its environmental and economic goals.