Sunday, June 23

SMEV Petitions NGT: Slashing E2W Subsidy has Disrupted India’s Transition to Clean Fuel

The registered association representing Indian manufacturers of electric  vehicles  SMEV (Society  of  Manufacturers of Electric Vehicles) has today petitioned the National Green Tribunal (NGT) expressing concerns that MHI’s latest decision to cut-down FAME 2 subsides is likely to disrupt India’s growth in the EV sector and consequently have a detrimental impact on the environmental and health indices of the country.

The SMEV via this letter has requested for NGT’s support to a Green Tax on fuel-based two-wheelers so as to incentivize the adoption of green vehicles and contribute to the national objective of environmental preservation and pollution reduction.

It is be noted that recently, the Ministry of Heavy Industries (MHI), assigned with the mandate to implement the FAME 2 programme in the country and specifically to induce mass transport shift towards E-mobility, has suddenly decided to cut down subsidies by 75%.

It needs no emphasis to illustrate that this decision flies in the face of almost every expression of intent by the Government to clean the air of pollutants, reduce pollution per se, reduce dependence on fossil fuels or carcinogenic by-products of such fuels. It also contravenes almost every international covenant that the Government has become a signatory to. It also contradicts the efforts of the Government to provide a fundamental right to breathe clean air and provide protect against health hazards caused by pollution.

Ajay Sharma, Secretary General – SMEV said, “At a time when the world has barely recovered from the onslaught of the lung-affecting COVID malaise, to allow such a policy U-turn is to play with health of the country. Electric vehicles are subsidized across the world with the intent to induce a mass shift towards non-polluting energy systems. The Ministry’s decision is contrary of this consciousness and an anomaly that defies logic or law especially, as the EV manufacturers were emboldened to shift technologies, work force, capital and enterprise towards this sector based on the support expressed by the government.”

Many OEMs are unable to cope with the financial stress caused by actions of the MHI as subsidies amounting to over Rs 1200 Crores have been held up and further demands of retrospective payback of subsidies given in 2019 has been made. In fact, it is a matter of time until they shut shop due to lack of working capital, loss of investor and bank support, delay in production timelines and a rapidly vanishing distribution network.

The cumulative effect of this has been devastating on start-ups and first movers in the EV 2W segment. To top it all, the MHI has decided to further reduce the subsidies starting June 2023. This might cause the EV sector to slip into a freefall as the rising cost of EVs will make the transition from tradition fuel-based vehicles to EVs extremely challenging.

To help ease the sector’s current ordeals, SMEV has proposed the implementation of an additional tax on polluting fuel-based two-wheelers as a counterbalance to the disruption caused.

This measure aligns with the three key objectives of the Government, namely: reducing fossil fuel usage, phasing out polluting vehicles, and significantly improving the health indices of our national population. It is important to emphasize that transitioning from Internal Combustion Engine (ICE) vehicles to Electric Vehicles (EVs) is the vision set forth by our Hon’ble Prime Minister.


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