FAME-II Fiasco: E2W OEMs Not Given Chance To Explain Their Position

Mukul Yudhveer Singh
07 Jan 2023
01:26 PM
2 Min Read

Over hundreds of crore rupees of FAME II subsidies have not been offered to 10-13 electric two-wheeler companies since the last few months

Banners of electric scooter OEMs - Hero Electric, Ampere, Okinawa
Banners of electric scooter OEMs - Hero Electric, Ampere, Okinawa

Many electric two-wheelers (E2W) manufacturers were not given any clarification on why their Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME II) subsidies were being suspended by the Government of India, a source close to the developments told Mobility Outlook. At present FAME II subsidies of about 10-13 E2W are not being given to them based on their allegedly flouting of the norms.

“The officials from the concerned Government departments visited the premises of these E2W companies, did some checks, and returned back,” the source said. 

The following messages informed these companies that their FAME II subsidies were being stopped for the time being as they were not found complying with respective guidelines. However, none of these companies have been given a chance to explain themselves.

“At the least, they could have been informed about which FAME II guidelines were not being met,” the source said.

Over hundreds of crore rupees of FAME II subsidies have not been offered to these OEMs, the source alleged. Various calls were made, and emails sent to the Department of Heavy Industries (DHI) did not get any response till the filing of this story.

Action Based On Emails Via Fake Accounts

Interestingly, the Society of Manufacturers of Electric Vehicles (SMEV) has sent multiple petitions to DHI alleging that the department's actions are based on emails received via fake accounts. 

“It is not yet clear who or which organisation is behind the emails sent to DHI. How can you trust a person or an organisation hiding behind fake email accounts” the individual questioned.

One of the recent petitions that SMEV has sent to DHI read, “There is no precedent, no allocation for this kind of action. There was no show cause; there were no dialogue or discussions. This arbitrary action has the potential of dismantling the entire FAME architecture making a mockery of the very proposal that gave EV adoption a fillip.”

As an aftermath of FAME II subsidies being held up for Hero Electric, Okinawa, Greaves, and various others, retails of some of these companies have been hit during the last few months of 2022. Also to be mentioned here is that many E2W start-ups have made most of their sales in the last three to four months of the last calendar. Notably, the chances of Hero Electric and Okinawa ending last year at the top position of E2W sales in India may have dried up because of the drying up of FAME II subsidies.

CY2022 - Month On Month sales of electric two-wheeler OEMs
CY2022 - Month On Month sales of electric two-wheeler OEMs

Okinawa, which sold over 14,000 E2Ws in October 2022, and over 9,000 in November 2022, ended up selling only 5,000 in December. Similarly, Greaves could only retail 4,408 E2W units in the same month. A consultant had previously told this correspondent that the drying up of subsidies had led to a price increase of 30-40% for such companies, leading to lesser sales. 

Dialogue Channel Opening Again

Mobility Outlook has also learnt that the dialogue channel between the authorities and the affected E2W OEMs has begun to open again. There is also a meeting fixed between the Parliamentary Committee and the OEMs on January 10, 2023.

“The affected OEMs are hopeful that their pains will be heard this time,” the source said. Some of these OEMs have also started receiving explanations about the FAME II norms; accordingly, their subsidies were being held up. Notably, the Ministry of Heavy Industries has recently appointed a new secretary.

A part of SMEV's fourth petition that Mobility Outlook has seen reads: “Even if DHI were to realise its folly and reimburse these companies their back dues in subsidy, how does it intend to make up for the damage caused to their operations and their financial sustainability.”

It continued, “How do you repatriate these companies the money lost in delays, loan defaults, and debt servicing? What about the nine months of sales vacuum? The revenues lost, the potential profits destroyed?”

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