EV subsidies worth Rs 1,100 cr allegedly held back by Ministry of Heavy Industries, says industry body

The subsidies have been stopped since the government is investigating if components used by EV makers are largely locally sourced.

FPJ Web DeskUpdated: Tuesday, December 13, 2022, 06:31 PM IST
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Ather Energy

The number of electric scooters and cars seen zooming past on roads has gone up in Indian cities over the past few years. But while states such as UP have introduced measures including a 15 per cent subsidy on ex-factory costs, Maharashtra and Goa have ended subsidies for EVs. Facing a government crackdown over violation of manufacturing norms, the sector is now demanding restoration of subsidies worth Rs 1,100 crore blocked by authorities.

Ministry’s stance choking firms

An industry body, the Society of Manufacturers of Electric Vehicles, has urged the government to release the subsidies stopped by the Ministry of Heavy Industries. It has said that depriving firms of discounts on manufacturing costs in such a manner can choke the sector’s growth, and has led to an unprecedented crisis for electric two-wheeler makers. The lobby has even warned that companies might declaring closure in public, and called for a committee to be formed for resolving the situation.

Current model not sustainable

Subsidy amounts are sent to the accounts of EV makers after the vehicles are sold under the current model, which the industry body considers unsustainable. The ministry has allegedly held back Rs 1,100 crore in subsidies since some two-wheeler EV manufacturers were found violating manufacturing norms. Firms are being investigated to check if most of their components are locally sourced, which is a crucial condition for them to avail of subsidies.

In response to the crackdown, the industry has also asserted that such localisation norms aren’t feasible for it in the short term, while EV adoption is still in its nascent stage. They also argue that the ability to meet target dates for localisation set by the authorities, has also been hit because of the pandemic that affected manufacturing for two years.

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