The Society of Manufacturers of Electric Vehicles (SMEV) on Tuesday petitioned the National Green Tribunal (NGT) over the Ministry of Heavy Industries’ (MHI’s) decision to slash the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME-II) subsidy of electric two-wheeler to Rs 10,000 per Kwh from the Rs 15,000 per Kwh.

The industry body in its petition said that the decision 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 SMEV has also requested for NGT’s support to a Green Tax on fuel-based two-wheelers so as to incentivize the adoption of green vehicles and contribute to the national objective of environmental preservation and pollution reduction.

“It needs no emphasis to illustrate that this decision flies in the face of almost every expression of intent by the Government to clean the air of pollutants, reduce pollution per se, and reduce dependence on fossil fuels or carcinogenic by-products of such fuels,” SMEV said. 

It contravenes almost every international covenant that the Government has become a signatory to. It also contradicts the efforts of the Government to provide a fundamental right to breathe clean air and provide protection against health hazards caused by pollution, the body said. 

The industry body’s action comes weeks after MHI’s decision comes into action on June 1. Apart from reducing the per Kwh incentive by Rs 5,000, the ministry also reduced the maximum subsidy cap of 40 per cent of the ex-factory price of the vehicle to 15 per cent. 

Ajay Sharma, Secretary General – SMEV said, “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 the health of the country. Electric vehicles are subsidised across the world with the intent to induce a mass shift towards non-polluting energy systems. The Ministry’s decision is contrary to this consciousness and an anomaly that defies logic or law especially, as the EV manufacturers were emboldened to shift technologies, workforce, capital, and enterprise towards this sector based on the support expressed by the government.”

The EV industry body said that many Original Equipment Manufacturers (OEMs) are unable to cope with the financial stress as subsidies amounting to over Rs 1200 crore have been held up and further demands of retrospective payback of subsidies given in 2019 have been made. 

“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,” SMEV said.

The cumulative effect of this has been devastating on start-ups and first movers in the EV 2W segment. To top it all, the MHI has decided to further reduce the subsidies starting June 2023, the letter sent to NGT reads.

“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,” it said. 

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.