FAME-II Issues: SMEV Seeks Commerce Ministry’s Support, Says EV Sector Near ‘Breaking Point’

FAME-II Issues: SMEV Seeks Commerce Ministry’s Support, Says EV Sector Near ‘Breaking Point’

SUMMARY

In a letter to Commerce Minister Piyush Goyal, the SMEV sought ‘contingency support’ for the EV industry, which, it said, has been hit hard by the issues with the FAME-II scheme

The SMEV said that unpaid FAME-II subsidy of over INR 1,200 Cr, along with other issues, have created a crisis for the industry and pushed it near the breaking point

While the SMEV has been claiming that the FAME-II issues have affected the EV sector, the government’s action came after it found many of the OEMs violating the norms of the scheme

Industry body Society of Manufacturers of Electric Vehicles (SMEV) on Monday (June 19) wrote to Minister of Commerce and Industry Piyush Goyal seeking ‘contingency support’ for the electric vehicle (EV) industry, which, it said, has been hit hard by the issues with the FAME-II scheme.

The SMEV, in its letter to Goyal, said that unpaid FAME-II subsidy dues of INR 1,200 Cr since the last fiscal, an embargo on original equipment manufacturers (OEMs) from listing their sales on the official National Automotive Board (NAB) portal, and notices to recover past paid subsidies have created a crisis for the industry. The situation is near ‘breaking point’, it added.

The development comes days after the SMEV wrote a similar letter to the government think tank NITI Aayog calling the past one year’s regulatory actions by the Ministry of Heavy Industries (MHI) on the electric two-wheeler players “detrimental”. The industry body also said that the ministry’s actions have “contaminated” the national emobility charter.

In its latest letter to Goyal, the SMEV said, “You will appreciate that this triple whammy is unprecedented in the annals of business in the country and that nowhere in the world do we see this kind of vindictive actions against the very companies that pioneered the EV revolution in the country – at a time when there was no government support to the sector at all.”

“The absolute unreasonable situation, coupled with a cavalier attitude towards the financial condition of these companies has required us to seek your support as the Hon’ble Minister of Commerce and Industry who might understand the business cycle, the production and process of industrial units, the financial cycle and what impact it has on business when the cycle stops,” it added.

Further, the SMEV also said that the regulatory uncertainties have impacted homegrown EV startups that were fuelled by the government’s zeal towards ‘Make in India’ and ‘Start-Up India’ initiatives.

It must be noted that while the SMEV has been claiming that the issues have affected the EV sector, the government’s action came after it found many of the OEMs violating FAME-II norms. Hero Electric, Okinawa Autotech, Revolt, Ampere, and several others were probed for allegedly flouting minimum localisation norms of the FAME-II scheme. Later, Ola Electric, Ather Energy, TVS Motor, and Hero MotoCorp were probed for mispricing the vehicles and later, they agreed to refund crores of rupees to their customers.

While the issues with the FAME-II scheme affected the sale of two-wheeler EV manufacturers over the last few months, the recent FAME-II subsidy cut by the government and the subsequent increase in vehicle prices by several manufacturers is expected to further dent their vehicle registrations. 

The electric two-wheeler registrations in India crossed the 1 Lakh mark for the first time in May. The number stands at 19,645 units till June 19, as per Vahan data, which is not even 20% of last month’s sales. 

Vehicle registrations for Ola Electric, which stood at 28,500 units last month, stand at 8,059 units so far in June. On the other hand, TVS Motor’s vehicle registrations stand at 1,809 units so far this month as against 20,379 units in May. 

Commenting on the decline in registrations, Sohinder Gill, director general of SMEV, said, “It will be to nobody’s credit if these EV companies fail or are sold for a song to the highest bidder. It will be a black mark against Indian enterprise and the burgeoning emobility plans of the government. It is important to note that investors across the world are watching this space closely, and banks and financiers are refusing to extend credit.”

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.

You have reached your limit of free stories
Become An Inc42 Plus Member

Become a Startup Insider in 2024 with Inc42 Plus. Join our exclusive community of 10,000+ founders, investors & operators and stay ahead in India’s startup & business economy.

2 YEAR PLAN
₹19999
₹7999
₹333/Month
Unlock 60% OFF
Cancel Anytime
1 YEAR PLAN
₹9999
₹4999
₹416/Month
Unlock 50% OFF
Cancel Anytime
Already A Member?
Discover Startups & Business Models

Unleash your potential by exploring unlimited articles, trackers, and playbooks. Identify the hottest startup deals, supercharge your innovation projects, and stay updated with expert curation.

FAME-II Issues: SMEV Seeks Commerce Ministry’s Support, Says EV Sector Near ‘Breaking Point’-Inc42 Media
How-To’s on Starting & Scaling Up

Empower yourself with comprehensive playbooks, expert analysis, and invaluable insights. Learn to validate ideas, acquire customers, secure funding, and navigate the journey to startup success.

FAME-II Issues: SMEV Seeks Commerce Ministry’s Support, Says EV Sector Near ‘Breaking Point’-Inc42 Media
Identify Trends & New Markets

Access 75+ in-depth reports on frontier industries. Gain exclusive market intelligence, understand market landscapes, and decode emerging trends to make informed decisions.

FAME-II Issues: SMEV Seeks Commerce Ministry’s Support, Says EV Sector Near ‘Breaking Point’-Inc42 Media
Track & Decode the Investment Landscape

Stay ahead with startup and funding trackers. Analyse investment strategies, profile successful investors, and keep track of upcoming funds, accelerators, and more.

FAME-II Issues: SMEV Seeks Commerce Ministry’s Support, Says EV Sector Near ‘Breaking Point’-Inc42 Media
FAME-II Issues: SMEV Seeks Commerce Ministry’s Support, Says EV Sector Near ‘Breaking Point’-Inc42 Media
You’re in Good company