The Society of Manufacturers of Electric Vehicles (SMEV) on Tuesday petitioned the National Green Tribunal (NGT) expressing concerns that the Ministry of Heavy Industries (MHI’s) latest decision to cut down FAME-II subsidies is likely to disrupt India’s growth in the EV sector and consequently have a detrimental impact on the environmental and health indices of the country.

The registered association representing Indian manufacturers of EVs, through a letter, requested for NGT’s support to impose a green tax on fuel-based two-wheelers so as to incentivise the adoption of green vehicles and contribute to the national objective of environmental preservation and pollution reduction.

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It is be noted that recently, the MHI, assigned with the mandate to implement the FAME-II programme in the country and specifically to induce mass transport shift towards e-mobility, suddenly decided to cut down subsidies by 75 per cent, it wrote.

“At a time when the world has barely recovered from the onslaught of the lung-affecting Covid malaise, to allow such a policy U-turn is to play with health of the country. EVs are subsidised across the world with the intent to induce a mass shift towards non-polluting energy systems. The Ministry’s decision is contrary of this consciousness and an anomaly that defies logic or law,” Ajay Sharma, Secretary General, SMEV, said.

Many original equipment manufacturers (OEMs) are unable to cope with the financial stress caused by actions of the MHI as subsidies amounting to over ₹1,200 crore have been held up and further demands of retrospective payback of subsidies given in 2019 has been made, he said.

“In fact, it is a matter of time until they shut shop due to lack of working capital, loss of investor and bank support, delay in production timelines and a rapidly vanishing distribution network,” Sharma said.

The cumulative effect of this has been devastating on start-ups and first movers in the EV two-wheeler segment. To top it all, the MHI has decided to further reduce the subsidies starting June 2023. This might cause the EV sector to slip into a freefall as the rising cost of EVs will make the transition from traditional fuel-based vehicles to EVs extremely challenging, he wrote in the letter.

“To help ease the sector’s current ordeals, SMEV has proposed the implementation of an additional tax on polluting fuel-based two-wheelers as a counterbalance to the disruption caused,” he added.