Seven electric two-wheeler companies have suffered a cumulative loss of over Rs 9,000 crore on account of unpaid dues and loss of market after their subsidies were stopped last year, the Society of Manufacturers of Electric Vehicles (SMEV) said on Wednesday.
These companies have also been directed by the govt to refund the subsidies availed by them.
The audit by SMEV's chartered accountants indicates the total, cumulative damages to affected companies could account for over Rs 9,000 crore on a conservative basis, it noted.
This cursory audit estimates cumulative losses on account of unpaid dues, interest, debt, loss of market share, reputational loss, cost of capital and potential recapitalisation, to around Rs 9,075 crore ever since the Ministry of Heavy Industries held up their subsidies since 2022, SMEV said.
The fact is some may never recover, and some may just wind up, it added.
Highlighting the need for a speedy resolution, SMEV Chief Evangelist Sanjay Kaul pointed out it is ironic that while the industry engages with prospective investors about deploying USD 1 billion in the Indian EV sector, the losses already correspond to almost the same amount of money.
In a letter to Union Minister Mahendra Nath Pandey, he stated that the OEMs (Original Equipment Manufacturers) are reaching a breaking point owing to daily mounting losses.
The letter proposes that if the intention of the ministry was to punish these OEMs, this delay is practically finishing them as this punishment has continued for over 22 months, which itself is a crime.
"It appears that the OEMs have a serious predicament because apart from the monies held up for 18-22 months as unpaid subsidies, and the subsequent claim of MHI to claw back older subsidies, their new models have not been allowed to be uploaded on the NAB portal - in effect blocking them from doing any business at competitive prices," Kaul said.
SMEV proposes the creation of a Sinking Fund by the ministry to help OEMs on the brink of closure get back on their feet through soft loans, grants or other such mechanisms that can revive them as it falls within MHI's ambit to build the EV eco-system through financing initiatives, he added.
SMEV urges Centre to levy additional green tax on ICE two-wheelers
Electric 2-wheeler sales rise over two-and-half fold to 846,976 units: SMEV
EV industry body seeks Parl's intervention in release of pending subsidies
Electric two-wheeler registrations recover in July but very modestly
EV makers body SMEV suspends constitution, appoints Sanjay Kaul for rejig
Axis Bank to raise stake in Max Life through Rs 161 crore investment
L&T to look at up to $4 bn investment in green hydrogen, with partners
Svatantra Microfin-Chaitanya deal not trailer of M&A wave in MFI space
QwikSkills plans to hire 300 trained professionals by end of 2023
Kal Airways promoter seeks attachment of 50% of Spicejet's daily revenue
The government is seeking a refund of subsidies from Hero Electric, Okinawa Autotech, Ampere EV, Revolt Motors, Benling India, Amo Mobility, and Lohia Auto. An investigation by the heavy industries ministry has revealed that these companies have availed fiscal incentives under the scheme by violating the norms.
As per the rules of the scheme, incentives were allowed to produce electric vehicles by using 'Made in India' components, but in the investigation, it was found that these seven firms allegedly used imported components.
The ministry conducted the investigation after receiving anonymous e-mails alleging that several EV makers were claiming subsidies without complying with the Phased Manufacturing Plan (PMP) rules, which are intended to boost domestic manufacturing of these electric vehicles.
After that, the ministry delayed the distribution of subsidies last financial year. To promote electric and hybrid vehicles, a Rs 10,000 crore programme under the FAME-II scheme was announced in 2019. It is the expanded version of the present scheme FAME (Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles) India I, which was launched on April 1, 2015, with a total outlay of Rs 895 crore.
In three-wheeler and four-wheeler segments, incentives apply mainly to vehicles used for public transport or registered commercial purposes. In the two-wheeler segment, the focus is on private vehicles.