Heavy industry ministry's actions sabotaging FAME-II: SMEV to Niti Aayog

The Society of Manufacturers of Electric Vehicles has written to Niti Aayog, urging to conduct a comprehensive review of the Faster Adoption and Manufacturing of Electric Vehicles (FAME) II scheme and claimed that actions of the heavy industries ministry are "sabotaging" the policy.

In a letter to Niti Aayog Chairperson Suman K Berry, Society of Manufacturers of Electric Vehicles (SMEV) Secretary General Ajay Sharma said actions of the ministry over the past 18 months are likely to impact sales and substantially delay the process of electric vehicle (EV) adoption and penetration in the country.

The industry body pointed out withholding subsidies, demanding retrospective clawbacks of subsidies given in 2019, delisting companies from the NAB (National Automotive Board) portal, and the latest move to slash subsidies by the Ministry of Heavy Industries (MHI) and called them "a series of detrimental actions".

The "subsidy blockade, clawback notices, and embargo on future sales are sabotaging the FAME-II policy", Sharma said.

The deterioration of FAME-II policies and the deviation from the Niti Aayog's vision raises questions about the intended mass movement that was envisioned for e-mobility, he added.

While acknowledging the work undertaken by Niti Aayog in providing the initial thrust to the vision of empowering India's transition from ICE to EVs, he said, "It is in this spirit that I implore you to re-evaluate the current state of FAME-II policy and realign these initiatives with their original intent, ensuring that they serve as catalysts for a mass movement towards sustainable transportation and a greener future".

Further, he said, "I kindly request Niti Aayog to conduct a comprehensive review of the policy, focusing on rectifying the deviations and restoring the inclusive and ambitious nature of the e-mobility charter".

In his letter, Sharma said that as a consequence of the actions of the ministry, a state of disequilibrium in the market has been created "given that there is no more a level playing field in the automotive sector".

"The MHI's decision to blockade subsidy flow to OEMs (Original Equipment Manufacturers) has seen the demise of existing market leaders at the expense of legacy players. Startups are being punished. Four of the top EV producers since 2018-2020 have been relegated to the bottom four today," he said.

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, Sharma claimed.

He also alleged that the "current state of affairs reflects a corrosive transformation into an elitist programme, neglecting the principles of inclusivity and accessibility".

"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," Sharma wrote.

The government had reduced the subsidy provided under the FAME-II scheme applicable to electric two-wheelers registered on or after June 1, 2023.

Last month, the MHI notified the changes following which for electric two-wheelers, the demand incentive has been kept at Rs 10,000 per kWh. The cap on incentives for electric two-wheelers has been reduced to 15 per cent of the ex-factory price of vehicles from 40 per cent earlier.

The FAME scheme commenced on April 1, 2019, for a period of three years, which was further extended for a period of two years up to March 31, 2024.

The total outlay for FAME Scheme Phase II is Rs 10,000 crore to provide incentives to buyers (end users or consumers) of EVs to enable wider adoption, which may be encouraged as a purchase price.

The scheme is exclusively for public and commercial transport in the segments of electric three-wheelers (e-3W), electric four-wheelers (e-4W), and electric buses but is also available to privately-owned registered electric two-wheelers (e-2W).