SMEV Writes To Govt, flag financial crisis
The Society of Manufacturers of Electric Vehicles (SMEV)—an association representing Indian manufacturers of electric vehicles on Friday wrote to the union minister of finance Nirmala Sitharaman, proposing the creation of an INR 3000 cr rehabilitation fund to revive and sustain operations of OEMs which have been badly affected by the recent FAME subsidy blocks.
SMEV has maintained that the total amount of subsidies withheld and still due to various E2W OEMs amount to over INR 1200 crores. The industry has been awaiting the funds for over 18 months exclusive of the interest.
It is to be noted that due to a series of exarcebating circumstances, the department has on the one hand has asked some OEMs to refund monies to customers and on the other demanded return of earlier subsidies from others, irrespective of the nature of their dispute.
Sohinder Gill, Director General – SMEV, commenting on the proposition said, “The cumulative effect of the subsidy blockade, the claim on older subsidies and the refusal to allow future sales has been devastating on start-ups and first movers in the EV 2W segment. Many of these companies will not be able to come out of the financial stress caused by these actions. In fact, their post-resolution existence is also a matter of time. It is therefore our considered, sincere, suggestion that the Ministry of Finance may consider the Rehabilitation Fund to help the affected companies sustain for the next year or two at least.”
The collapse of the subsidy scheme has not only caused operations to stall, and sales to dry up, but acute pressure had been caused to Dealerships, even customers whose bookings had to be cancelled, the letter said. If we add the man-days lost, opportunity loss, market share depletion and the reputational damage collectively the figure would cross the INR 30,000 Crore mark on a conservative estimate up to now.
The worst impact has been on the investor community, which has become extremely averse to the sector owing to the frequent inimical actions against OEMs. Banks too have been unwilling to extend credit in fact; banks are suffering collateral damage since companies are unable to service loans under the circumstances.
SMEV has proposed to work closely with the Finance Ministry to determine the contours of such a fund, which could be in the shape of a grant; or a subvention scheme that could work as a guarantee mechanism for lenders and could be monitored by a committee.
SMEV believes that this proposition will help in both, bailing out highly stressed companies in the EV sector, as well as sending a positive signal to the global investor community about the Government’s commitment to its national E-Mobility charter.