Govt's 'rosy picture' of FAME II subsidies doesn't add up, says EV industry body

The Society of Manufacturers of Electric Vehicles said the government has not paid subsidies worth Rs 1,200 crore to EV manufacturers who've already passed the subsidies on to customers.

Govt's 'rosy picture' of FAME II subsidies doesn't add up, says EV industry body

Thursday April 27, 2023,

3 min Read

The Ministry of Heavy Industries has incorrectly stated that it has subsidised a million electric two-wheelers to abide by its April 2023 target, the Society of Manufacturers of Electric Vehicles (SMEV) said in a note on Thursday.

The EV industry body, which comprises most major EV makers, said the government's disclosure is incorrect and is a result of "serious accounting error".

Citing auditors who consult with the SMEV regularly, it claimed in a petition to the Parliamentary Standing Committee on Industry that the MHI's figures on FAME II targets are "incongruous and patently disingenuous", as they include sales that were not funded under the scheme.

The SMEV last week said the government owes nearly Rs 1,200 crore worth of subsidies to original equipment manufacturers (OEMs) that they've, at the moment, paid from their own pockets. It added that the delay in rebates was squeezing OEMs and making things hard for them, financially.

Over the last 15 months, OEMs have passed on Rs 1,400 crore worth of subsidies to customers, SMEV said.

Of the 9.6 lakh electric two-wheelers (E2Ws) that were sold between April 2019 and April 2023, 4.5 lakh haven't received reimbursement for the subsidy component to date.

"So, why is the Ministry of Heavy Industries accounting for EV sales of E2Ws whose subsidies it has not released? Probably because, if it did not, it would show up as a 50% deficit in target achievement; not the rosy picture the Department has been trying to paint—or more precisely, the dire situation it is trying to cover up," the SMEV said.

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The industry body, which issued a second note in two weeks critiquing the government for not making true on the promises it had laid out in FAME II, said OEMs have been struggling to survive because they have to "beg and borrow to pay off the subsidy liability that the department reneged on."

It added that the Rs 1,200 crore worth of subsidies that have been passed on by OEMs to customers have, in effect, financed the government's FAME II subsidy scheme, privately.

The SMEV is comprised of several OEMs including Hero Electric (also part of the management committee), Yulu, Piaggio Vehicles India, Kinetic, and Lohia, as well as EV component makers such as Sun Mobility, Tata Chemicals, GAIL, Exicom etc.

Referring to the government blocking subsidies because of non-compliance with localisation norms, the SMEV said almost all manufacturers have been declared to be "deficient on some count or the other."

"In any case, the numbers do not add up: either the Department accepts that it has failed the target by 50%, or it pays up the wrongly withheld subsidies and squares up the account," the EV industry body said.

Edited by Kanishk Singh