Amid FAME-II Troubles, SMEV Suspends Constitution & Goes Into Voluntary ‘Hibernation’

Industry body Society of Manufacturers of Electric Vehicles (SMEV), a harsh critic of the Centre’s FAME-II policy, on Thursday (July 6) said it is temporarily suspending its constitution. 

In a statement, the SMEV said it is going into hibernation and has appointed former Bharatiya Janata Party spokesperson Sanjay Kaul as ‘Chief Evangelist’ to revise the agenda of the association for the EV sector.

“We have requested Mr Kaul to help revise the agenda of the association for the sector and develop a new charter that aims to lift the industry from the situation it finds itself in right now. His experience in working with different groups, and his ability to forge consensus and his insight into the industry will be sought to help fashion a new direction for the association in relation to the EV sector,” said Ajay Sharma, secretary general of SMEV, said.

It is pertinent to note that the government’s probe into multiple electric two-wheeler manufacturers for misappropriating FAME-II subsidies and subsequent cut in the subsidies have hit India’s electric vehicle (EV) industry hard. The SMEV has been a vocal critic of these developments.

Last month, the industry body wrote to government think tank NITI Aayog saying the “detrimental actions” of the Centre since last year have “contaminated” the national emobility charter. 

The “triple whammy” of subsidy blockade, claw back notices and embargo on future sales are sabotaging the FAME II policy, it said, adding that the scheme has failed to achieve even 50% of its target since its launch in 2019.

Recently, the SMEV also wrote to Minister of Commerce and Industry Piyush Goyal, seeking ‘contingency support’ for the EV industry. It said the unpaid FAME-II subsidy dues of INR 1,200 Cr since last fiscal and several other issues have created a crisis for the industry.

Earlier, the SMEV criticised the Ministry of Heavy Industries (MHI) for gaps in its accounting of subsidies. It said that while 9.6 Lakh two-wheeler EVs were sold under the FAME-II scheme during April 2019 to April 2023 period, the OEMs had not received reimbursements for 4.5 Lakh vehicles. 

“This means that only around 5 Lakh EVs have been funded under the scheme, about 50% of the target,” the industry body had said.

Speaking on the rejig in the association, Sohinder Gill, DG of SMEV, said, “The SMEV has been proactive on issues concerning EV adoption and has partnered with the government’s efforts since inception and even before the FAME policy was initiated.”

Given the EV sector is under extreme stress currently, the SMEV is willing to work with all stakeholders to seek a way out, he added.

The SMEV has suspended all operational actions until a new structure is fashioned under the guidance of Kaul, informed the association. 

“We need to resolve the minor issues and move on to deploying the spate of investments coming India’s way in this sector,” said Kaul.

Meanwhile, following its probes finding misappropriation of subsidies by several electric two-wheeler manufacturers, the MHI recently slashed incentives under the FAME-II scheme to 15% of ex-factory price from 40% earlier and cut the demand incentive to INR 10,000/kWh from INR 15,000/kWh.

Consequently, OEMs increased their vehicle prices, which, in turn, hit demand. As per Vahan data, total electric two-wheeler registration in the country dropped to a 12-month low to 45,841 units in June from a whooping 1,05,374 in May this year.