EV start-ups up in arms

Disbursement delays of the FAME II subsidies are seriously impacting cash flows and production schedules of electric two-and three-wheeler start-ups in particular, writes Amit Mohile V.

- Amit Mohile V

EV start-ups involved in two-wheeler and three-wheeler production are facing a double whammy. They claim that on the one hand, their cash reserves are dwindling and on the other hand, the huge amounts of FAME II subsidies that they are entitled to are not being paid even though their vehicles are listed as 'active' in the latest FAME II subsidy list.

This non-payment of subsidies for over four months has resulted in discontent brewing among the players. The abrupt halt in subsidies, reportedly in the range of Rs 200 crore to Rs 300 crore, which had been fuelling the production and sales for over a year and half, have forced several start-ups to reduce or modify their production schedules.

The Ministry of Heavy Industry (MHI) that is responsible for the FAME subsidy disbursal maintains that it has been reimbursing the subsidies to the companies and that there has been no delay from their end, a senior official at MHI said. Founders of several e-mobility firms believe that "there is a lot more than what meets the eye". They claim they are being targeted at the legacy manufacturers' behest.

Over 80 percent of smaller manufacturers' cash flows have been severely impacted owing to the non-payment of subsidies, according to the new EV Federation that has been formed (See accompanying box). This is even as large firms - majority of them being the legacy manufacturers - continue to receive subsidies albeit with minor hiccups. Companies like Tata Motors, Mahindra & Mahindra and TVS have confirmed to Autocar Professional that they continue to receive the subsidies.