The Parliamentary Standing Committees on Industry and Estimates have asked for a resolution and revival of the E-Mobility revolution in India. But it might be too late, says the Society of Manufacturers of Electric Vehicles (SMEV), the apex body for EV manufacturers.
While congratulating the members of the Standing Committees on Industry and Estimates for their considered views and recommendations for the continued patronage of the FAME II policy, SMEV noted that it is rare that two different committees make almost the same recommendations on an issue.
EV Revolution
FAME deserves credit for the EV revolution as reducing fossil fuel dependence is an important agenda for the country, and EVs are an essential part of that solution. EVs will eventually replace most fossil fuel vehicles, and the objective should be to do it faster and in a given time frame. SMEV believes that FAME 2 initiative is a pathbreaking, pioneering policy architecture that has not only opened up the EV sector dramatically but has prepared the market to take off in full swing - provided a few irritants are resolved.
FY23 - Challenging Year
FY23 for the industry has been a challenging year for the industry: First, due to the repercussions of two years of COVID disruptions, and then due to the 12-month delay in subsidies. For the OEMs that have passed on the subsidies to customers, this delay has hugely squeezed their working capital resulting in a substantial drop in the industry volumes vis a vis target.
Fake emails
FAME was derailed by Fake emails, SMEV said, adding that the basis of the delay has been proven to be mischievous emails alleging non-adherence to policy norms regarding localisation targets. The charge of misappropriation has since been found to be misplaced because the monies due as subsidies have not been received as yet by OEMs while they have passed it on to customers. In effect, the Department is in debt of the OEMs.
Most of the debate on localisation – the prime misdemeanours held against OEMs so far - is a matter of degrees and a subject of minor negotiations. Over the last three years, most OEMs have struggled to secure local parts that adhere to quality standards but have achieved localisation to a greater or smaller degree by providing availability.
MSMEs
According to the apex body, EV startups got nothing. All difficulties in the supply of components resulted from two years of COVID that did not allow supply chains to grow. Most industries have been granted a reprieve in lieu of the COVID years, and the EV sector must also be similarly considered. Also worthy of note is that the industry kept the Ministry in the loop on the procurement difficulties.
It has to be admitted that the Ministry was reasonable to offer extensions continually – until the intervention of some vested interest parties that wished to scuttle the FAME scheme.
Unpaid Subsidies
Now that the country is almost ready with the entire supply chain, the only thing holding up the sector is the INR 1,200 crore worth of subsidies that have been withheld, leading to a serious liquidity crisis in the industry. Current trends show a slowing down of EV adoption due to the financial stress for the industry, which has been besieged by irritants designed to disturb the momentum of FAME 2. The need of the hour is for the Government and the industry to work together to resolve issues and put India back on track to meet its E Mobility targets.
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