- According to Kaul, the MHI’s actions to de-franchise the entire lot of small and medium sector OEMs from the scheme – who mainly were profit making, has led to a syndrome where the greater flow of government funding is being used to prop up the bottom lines of companies that are making substantial losses
In a recent letter written to the Nirmala Sitharaman, Honourable Union Finance Minister, Government of India, the Society of Manufacturers Of Electric Vehicles (SMEV) has pointed towards some critical issues. The letter, seen by Electronics For You team, reads “I am attempting to illustrate some of the adverse externalities such allocations have so far resulted in – as far as policy intent and targets go.”
Written by Sanjay Kaul, Chief Evangelist, Society of Manufacturers of Electric Vehicle, it goes on to mention that the Ministry of heavy Industries (MHI) already has access to Rs 1700 crore as finds with it. This amount is inclusive of Rs 1200 Crore still retained by the MHI since January 2022 in unpaid subsidies, and Rs 500 Crore that was “returned” by certain electric two-wheeler original equipment manufacturers (OEMs).
Earlier, SMEV had noted that the total number of electric two-wheelers sold under the FAME II scheme between April 2019 and 2023 is listed at 9.6 lakh. Of these, SMEV claims that 4.5 lakh vehicles have not received the subsidy component to date, “for one reason or another.”
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Moreover, in May 2023, MHI reduced the FAME II subsidy for electric two-wheelers from 40% to 15%. Instead of INR 15,000/kWH, only INR 10,000/kWH will now be available as a subsidy.
According to Kaul, the MHI’s actions to de-franchise the entire lot of small and medium sector OEMs from the scheme – who were mostly profit making, has led to a syndrome where the greater flow of government funding is being used to prop up the bottom lines of companies that are making substantial losses.
“It is worth asking if public funds should be put to use to cross subsidise well-capitalised, investor-fed, loss making companies. In fact, to the credit of CEOs of some such companies, they are on record saying their enterprises do not need FAME subsidies, he says in the letter.