India is poised to become an undeniable force in the global electric vehicle (EV) landscape by the year 2030. In a recent interview with ET Auto, Kamran Rizvi, Secretary of the Ministry of Heavy Industries, confidently stated that India would achieve global prominence in all facets of electric vehicles within this decade. Rizvi even predicted that this transformation would happen even sooner in the 2-wheeler segment.
A Bright Future for India’s EV Industry
Rising Above Subsidies
One of the noteworthy aspects of India’s EV journey is its commitment to financial support. Unlike countries such as China and the UK, which have begun to reduce or eliminate EV subsidies, India continues to allocate substantial resources to bolster the EV industry. However, Rizvi hinted that this financial assistance might not last indefinitely. “At some point, these schemes will come to an end,” he remarked.
Legal Action Looming
The backdrop to this ambitious vision is the government’s stern stance on electric two-wheeler companies. Reports have surfaced suggesting that legal actions are being explored against these companies for failing to adhere to the FAME II scheme norms.
The central government is actively seeking a refund of Rs 469 crore from seven electric two-wheeler manufacturers. These companies are accused of claiming incentives without complying with the Faster Adoption and Manufacturing of Electric Vehicles (FAME II) scheme norms. The firms under scrutiny include Hero Electric, Okinawa Autotech, Ampere EV, Revolt Motors, Benling India, Amo Mobility, and Lohia Auto.
Violation of Norms
An investigation by the Ministry of Heavy Industries revealed that these companies availed fiscal incentives by using imported components, contrary to the rules of the scheme that mandated the use of made-in-India components. This investigation was triggered by anonymous emails alleging that several EV manufacturers were securing subsidies without adhering to the Phased Manufacturing Plan (PMP) rules aimed at boosting domestic EV production.
As a result of these findings, subsidies were delayed in the last fiscal year, significantly impacting the companies involved. In their defense, these seven electric two-wheeler manufacturers have suggested the possibility of requiring customers to repay excess rebates they received when purchasing the vehicles.
Industry Turmoil and Losses
The repercussions of this dispute have been profound. The Society of Manufacturers of Electric Vehicles (SMEV) reported that the affected companies collectively suffered losses exceeding Rs 9,000 crore due to unpaid dues and a subsequent loss of market share after their subsidies were halted last year.
FAME-II: A Driving Force
To encourage the adoption of electric and hybrid vehicles, India introduced the ambitious Rs 10,000 crore FAME-II scheme in 2019. This program builds upon the foundation laid by the original FAME scheme, which was initiated on April 1, 2015, with a total allocation of Rs 895 crore.
In the context of the FAME-II scheme, incentives predominantly apply to three-wheeler and four-wheeler segments, focusing on vehicles utilized for public transport or registered commercial purposes. In contrast, the scheme places a strong emphasis on private vehicles within the two-wheeler segment.
As India accelerates towards its goal of becoming a global leader in the EV sector, it faces both challenges and opportunities. While financial support has been crucial in propelling the industry forward, legal compliance and adherence to norms are now under scrutiny. Only time will tell whether India’s commitment to electric mobility will lead to unrivaled success by 2030 or if further hurdles lie ahead on this electrifying journey.