New Delhi: The Society of Manufacturers of Electric Vehicles (SMEV), the apex body of the Indian Electric Vehicle industry, has raised questions regarding the Ministry of Heavy Industries’ recent reports of coercing an Original Equipment Manufacturer (OEM) to refund past subsidies. SMEV seeks clarification from the Ministry about the basis for the claim for subsidy refund and its impact on the processing of subsidies and official reimbursements during the period of 2020-2022.
Basis for Refund and Implications
In the letter to the Ministry, SMEV highlights that if the Ministry’s demand for subsidy refunds implies discrepancies in processing subsidies and reimbursements, it should address whether this cancellation would apply to all OEMs during the mentioned period. The organization also questions the legal foundation for the refund amounts, as these amounts don’t align with any prescribed mechanism in the rules.
Clarification on Subsidy Pass-through
SMEV points out that the Ministry has previously verified that the claimed subsidies were indeed passed on to customers and subsequently reimbursed to OEMs. In light of this, SMEV queries the rationale behind seeking subsidy refunds from OEMs when the subsidies were appropriately transferred to customers.
Proposed Solution
Earlier, SMEV suggested a solution involving the direct recovery of subsidy amounts from customers, which would have resolved the subsidy issue comprehensively.
Financial Impact and Budget Concerns
In the letter, SMEV brings attention to the financial implications of the Ministry’s demand for subsidy refunds. The organization notes that if the Ministry’s demand for refunding subsidies totaling Rs 469 Crores is realized, along with existing debts to OEMs of Rs 1200 Crores, the Ministry would have effectively recovered Rs 1669 Crores. This situation raises concerns about the viability of the Rs 2000 Crores budget allocated for the Electric Two-Wheeler (E2W) sector under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) 2 scheme.
SMEV’s Perspective on MHI’s Claims
SMEV said that the Ministry’s claims for subsidy refunds lack a solid basis and could deviate from established norms, practices, and policy rules. The organization suggests that such actions might not stand up to legal scrutiny.
SMEV’s View on OEMs’ Response
SMEV acknowledges the potential pressure that OEMs may feel to comply with the subsidy refund demand but anticipates that this situation could lead to embarrassment for the Ministry and might eventually be rectified. The organization refrains from commenting on OEMs that might have engaged in misrepresentation or misappropriation, allowing them to pursue settlements according to their judgment.