The apex body representing Indian manufacturers of electric vehicles -SMEV (Society of Manufacturers of Electric Vehicles), has today written to the Minister of Finance, Government of India, proposing the creation of an INR 3,000 crore rehabilitation fund to revive and sustain operations of OEMs which have been badly affected by the recent FAME subsidy blocks.
SMEV has maintained that the total amount of subsidies withheld and still due to various E2W OEMs amounts to over INR 1,200 crore. The industry has been awaiting the funds for over 18 months, exclusive of the interest.
As per SMEV, on the one hand, the department has asked some OEMs to refund monies to customers. On the other hand, they demanded the return of earlier subsidies from others, irrespective of the nature of their dispute.
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The collapse of the subsidy scheme has caused operations to stall and sales to dry up, and acute pressure had been caused to dealerships, even customers whose bookings had to be cancelled, the letter said. “If we add the man-days lost, opportunity loss, market share depletion and the reputational damage collectively the figure would cross the INR 30,000 crore mark on a conservative estimate up to now,” SMEV said.
The worst impact has been on the investor community, which has become extremely averse to the sector owing to the frequent inimical actions against OEMs.
Banks, too, have been unwilling to extend credit. Banks are suffering collateral damage since companies are unable to service loans under the circumstances.
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Sohinder Gill, Director General, SMEV, commenting on the proposition, said, “The cumulative effect of the subsidy blockade, the claim on older subsidies and the refusal to allow future sales has been devastating on start-ups and first movers in the EV 2W segment. Many of these companies will not be able to come out of the financial stress caused by these actions. In fact, their post-resolution existence is also a matter of time. It is therefore our considered, sincere, suggestion that the Ministry of Finance may consider the Rehabilitation Fund to help the affected companies sustain for the next year or two at least.”