Halt on EV subsidy leads to loss of Rs 9,000 crore for E2W companies

Seven

electric two-wheeler

According to an audit done by SMEV's chartered accountants, the total damages suffered by these businesses may reach 9,000 crore. The losses include unpaid fees, interest, debt, diminished market share, harm to reputation, cost of capital, and probable recapitalisation as a result of the Ministry of Heavy Industries' 2022 suspension of their subsidies. Some businesses would never be able to recoup from these losses, according to SMEV.

Sanjay Kaul, the chief evangelist for SMEV, has emphasised the need of finding a solution to this problem and called attention to the irony that, even as the Indian EV industry is in negotiations with prospective investors to invest $1 billion there, the losses incurred by these firms already equal that sum. Kaul has suggested that the ministry establish a Sinking Fund to offer lenient loans, grants, or other tools to help the faltering OEMs.

According to a Ministry of Heavy Industries inquiry, these businesses took advantage of the program's tax benefits by breaking the rules. To be eligible for subsidies, they were intended to employ "Made in India" components, however, it was discovered that these seven enterprises had reportedly used imported components. The delivery of subsidies was therefore postponed. With a budget of 10,000 crores, the government introduced the FAME-II initiative in 2019 to encourage electric and hybrid vehicles in India.