In a significant development, the Society of Manufacturers of Electric Vehicles (SMEV), the registered association representing Indian manufacturers of electric vehicles, has approached Niti Aayog, urging them to address the damaging consequences of the Faster Adoption and Manufacturing of Electric Vehicles (FAME) 2 policy.
SMEV argues that the policy’s series of adverse actions over the past year has severely hindered the nation’s ambitious E-Mobility charter, leading to a significant setback in achieving its objectives.
The Ministry of Heavy Industries (MHI) has implemented various unfavourable policies over the past 18 months, including withholding subsidies, requesting retroactive clawbacks of subsidies awarded in 2019, delisting businesses from the NAB site, and most recently, lowering subsidies. These steps are predicted to have an effect on sales and severely slow the country’s adoption and penetration of electric vehicles.
SMEV highlights the prevailing imbalance in the market, as the automotive sector no longer enjoys a level playing field. The MHI’s decision to halt the flow of subsidies to original equipment manufacturers (OEMs) has led to the downfall of established market leaders, while startups face punishment. Startups that were once among the top four electric vehicle producers from 2018 to 2020 now find themselves at the bottom.
The effects of blocking subsidies to OEMs, who had dutifully passed on these benefits to customers, are evident. OEMs are struggling to sustain their operations, investors are becoming cautious, banks are withdrawing support, employees are seeking alternatives, debts are mounting, and closures seem imminent.
Sohinder Singh Gill, DG-SMEV, expressed his concerns, stating, “The triple whammy of subsidy blockade, clawback notices, and the embargo on future sales is sabotaging the FAME 2 policy. It is clear that the country’s E-Mobility ambitions have been adversely affected, as the scheme has failed to achieve even 50% of its mandated target over the past five years since 2019. The deterioration of FAME 2 and the deviation from Niti Aayog’s vision raise questions about the intended mass movement envisioned for E-Mobility.”
Gill further explained, “A detrimental consequence of sidelining mass-market leaders is the declining popularity of low-end commuter scooters, which are losing ground to the premium segment. In an unexpected turn of events, the FAME scheme has inadvertently triggered a surge in demand for premium electric bikes, at the expense of commuter scooters.”
Also Read: SMEV Petitions NGT: Urges Green Tax on Fuel-Based Two-Wheelers, Details Inside
The current situation shows a shift towards an elitist programme that disregards the values of equality and accessibility. It is depressing to see how these policy initiatives have turned from an inclusive, progressive movement to an elitist one,
SMEV has proposed to the Government, through the Finance Ministry, the implementation of a 10 percent Green tax on polluting two-wheelers to restore balance in the field. However, this measure alone is insufficient. OEMs are burdened by the triple whammy of subsidy blockades, clawback notices, and an embargo on future sales under FAME.
Considering India’s commitment to zero carbon emissions, its G20 presidency, the urgent need to tackle air pollution, the imperative to combat climate change, and prioritize public health, it is crucial to pursue electric vehicle adoption with utmost urgency and determination. Unfortunately, recent developments have hindered the aggressive pursuit of EV adoption, impeding progress towards the aforementioned goals.
SMEV’s letter to Niti Aayog expresses its appreciation for the organization’s initial efforts in driving India’s transition from internal combustion engines (ICE) to electric vehicles. In the same spirit, SMEV urges Niti Aayog to reevaluate the current state of the FAME 2 policy and align these initiatives with the original intention of catalyzing a mass movement towards sustainable transportation.
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