Usually every industry has a body that represents the genuine grievances, fears and wishes of companies it represents. The Society of Indian Automobile Manufacturers (SIAM) represents OEMs (vehicle manufacturers) operating out of India. Similarly, FADA or the Federation of Automobile Dealers Associations represents the automobile dealers of India. Electric vehicle manufacturers are represented by the Society of Manufacturers of Electric Vehicles (SMEV).
Of late, a lot of allegations have been flying thick and fast in the electric vehicle industry space. Sometimes, it is difficult to get a complete background of the people or entities behind it. A few months back, journalists got an email from an Akash Sharma CA, CFA alleging fraudulent practices of two wheeler OEMs. Who is Akash Sharma? No one knows and we can only guess that he is a Chartered Accountant and a Chief Financial Analyst. There is no further detail about him in the email and there is no clue for which company he works.
The email noted that several OEMs like Ather, Ola and TVS are importing parts by routing all the CKD scooter shipments through various domestic supply companies and continue to commit fraud in the Fame 2 subsidy scheme. Sharma even went to the extent of saying “stop the FAME-2 scheme with immediate effect”. Who does Sharma represent? We are still trying to figure that out.
Now, a relatively unknown body, Centre For Business, Industry & Trade Advocacy or CBITA, a company based in New Delhi has sent out a release, which is basically a letter dated May 26, 2023 written by CBITA to M.N. Pandey, Minister of Heavy Industries.
The letter says that the action taken by the Ministry of Heavy Industries (MHI) against OEMs to claw back earlier subsidies is tantamount to the complete collapse of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME II) subsidy. It explains that having missed targets by 50%, FAME II is now gearing for a failure of almost 85% in target achievement.
The latest action of penalties on OEMs will conclude that the MHI disbursed literally no funds under the FAME II scheme since 2019. FAME II will achieve the dubious distinction of being the only Government Scheme since independence to have been financed by private funds.
“The Department has slapped 4 OEMs with 100 odd crores as a penalty other than asking them to return the monies collected from customers as a punishment for breaching the 1.5 lakh rupee threshold. Meanwhile it has issued similar demands to other OEMs who have no such matter of dispute but an earlier pending case of non-compliance with PMP norms. Should the MHI be able to claw back the amounts from these OEMs on the pretext of subsidies issued before it received the alleged complaints, it would be tantamount to the Ministry having disbursed almost no subsidies at all.
In effect, the recent correction issued by the SMEV – that the MHI achieved only 50% of its mandated target would shrink to probably just 15% achievement if this subsidy is also withdrawn. It would mean that the MHI has literally given no subsidy to the OEMs since inception: while having them pass on the subsidy to the tune of 2000 crores to the customers from their own pockets,” said the letter written by Aishwarya Gupta, Counsel for the Committee on Electric Mobility, CBITA. Centre for Business, Industry & Trade Advocacy claims to be an issue-based advocacy group that assists global businesses and industry navigate policy, processes and environment in India. CBITA assists corporates, stakeholders and Governments to find workable solutions to problems of policy and processes. CBITA
In the midst of all this, reports suggest that the FAME 2 subsidy on electric vehicles could be slashed to Rs 10,000 per KW, max cap at 15% of vehicle cost. The Ministry wants to bring down the subsidy offered on electric two-wheelers from the existing Rs 15,000 per KW to Rs 10,000 per KW. The Ministry wants to bring down the subsidy offered on electric two-wheelers from the existing Rs 15,000 per KW to Rs 10,000 per KW. The maximum cap on subsidy could also be brought down to 15 percent of the MRP from the current 40 percent.
Though the Government has yet to announce these new norms, the SMEV Director General Sohinder Gill has said in a statement that this sharp reduction in the subsidy is going to hurt the market and the adoption of E2Ws (electric two-wheelers) may go down substantially.
Surprisingly, SMEV has on its website a column for press releases that consists reports from leading newspapers. Those are not press releases, but press coverages. This body should wake up and start issuing press statements based on its own understanding and interactions, and not on unsubstantiated reports carried out in some newspapers. It’s a free for all in the electric vehicle industry space. It’s time SMEV stood up and sorted out this mess with some authentic information and statements.
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