Electric vehicle (EV) producers have knocked on Finance Minister Nirmala Sitharaman’s doors to seek help for tiding over the financial stress caused by an inordinate delay in the release of ₹1,200 crore in subsidies due to two-wheeler EV manufacturers, stressing that banks had stopped extending credit to them and losses were piling up.
In a letter addressed to Ms. Sitharaman on Thursday, the Society of Manufacturers of Electric Vehicles (SMEV) secretary general Ajay Sharma said that even as the subsidies were due from the Ministry of Heavy Industries, which oversees the sector, since January 2022, the ministry had also sought the return of earlier subventions paid under the FAME II scheme. Firms had also been asked to refund some money to their customers.
Cry for help
SMEV secretary general Ajay Sharma urges Finance Ministry to consider creating a ₹3000 crore rehabilitation fund
“The cumulative effect of this has been devastating on start-ups and first movers in the EV 2-wheeler segment,” Mr. Sharma wrote. “Many of them will not be able to come out of the financial stress,” he added, urging the Finance Ministry to consider creating a ₹3,000 crore rehabilitation fund to help revive and sustain these producers for a year or two.
The industry body claimed that manufacturers’ operations had stalled, dealers were under stress and customer bookings had been cancelled and the overall damage to the industry could well exceed ₹30,000 crore. It argued that investors had become extremely averse to the sector due to the “frequent inimical actions against OEMs [Original Equipment Manufacturers]”, and banks were not only unwilling to extend fresh credit, but also suffering ‘collateral damage’ as firms were slipping up on servicing their loans.
