SMEV petitions Niti Aayog to review FAME Policy

In past 18 months there been blocking subsidy, claw back notices, and delisting of companies will results lower EV sales which sabotaging the FAME II policy.

New Delhi: Society of Manufacturers of Electric Vehicles of New Delhi, a registered association representing Indian manufacturers of electric vehicles had petitioned the Niti Aayog on 15^th June 2023 to conduct the comprehensive review of FAME II subsidy scheme and claimed that the actions taken by the heavy industries are “Sabotaging” the Policy.

The Ministry of Heavy Industries’ actions over the past 18 months i.e., withholding subsidies, demanding retrospective claw backs of subsidy given in 2019, delisting companies from the NAB portal and now its latest move to slash subsidies, is likely to impact sales and substantially delay the process of EV adoption and penetration in the country, it states.

SMEV points out that the situation has created a state of disequilibrium in the market given that there is no more a level playing field in the automotive sector. The direct and indirect impact of blocking subsidies to OEMs who had paid these out diligently to customers is plain to see: The OEMs are struggling to stay afloat; investors are wary; banks are withdrawing; employees are fleeing; debts are rising, and closures are the next imminent step.

Sohinder Singh Gill, DG – SMEV said, “The triple whammy of subsidy, claw back 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 the Niti Aayog's vision raise questions about the intended mass movement that was envisioned for E-Mobility.”

He further adds, “A specific deleterious impact of squeezing out mass market leaders has been that the low end commuter scooters are losing out to the premium segment. In a contrarian effect, not seen elsewhere, the FAME scheme has spawned a spurt in the premium EV bikes at the cost of commuter scooters.”

It is disheartening to witness how these policy initiatives have transformed from a progressive and inclusive movement into an elitist pitch, deviating from the very essence of Niti Aayog's prescriptions, the body adds.

SMEV has proposed to the Government through the Finance Ministry that a 10% Green tax on polluting 2Wheelers could offer some balance to the field.  Considering India's commitment to zero carbon emissions, its G20 presidency, the pressing challenges of air pollution, the urgent need to combat climate change, and the imperative of public health, it is essential that EV adoption be pursued with utmost urgency and determination. Unfortunately, the recent developments have hindered the aggressive pursuit of EV adoption, impeding progress towards the aforementioned goals.

FAME scheme:

Faster Adoption and Manufacturing of Hybrid & Electric Vehicles is an Indian government programme first introduced on April 1, 2015, to encourage manufacturers, component suppliers and other stake holders to invest in the manufacture, sale and support of hybrid and electric vehicles. Phase I of the original scheme ran for a period of two years i.e. April 1, 2015 to March 31, 2017, and then extended to March 2019. Under the FAME I scheme, USD123m was allotted out of the amount of USD 2.15bn(budgeted) set aside for this development.

(FAME) of phase II scheme with a fund allocation of USD 1.33bn from 1st April 2019 to 31st Mar 2022, and  it is extended till 31st March 2024. FAME Schemes. FAME II plans to support 1 million e-two-wheelers, 500,000 e-three-wheelers, 55,000 four-wheelers and 7,000 buses. The scheme proposes for establishment of charging infrastructure, whereby about 2,700 charging stations will be established in various cities across the country so that there will be availability of at least one charging station in a grid of 3km x 3 km.