Electric vehicle industry body SMEV on Tuesday appealed to a parliamentary panel to direct the government to release the pending subsidy of Rs 1,200 crore earmarked for the liquidity-hit sector.

In a petition to the Parliamentary Standing Committees on Industry and Estimates, the Society of Manufacturers of Electric Vehicles (SMEV) stated that EV adoption is slowing down due to the financial stress being faced by the industry.

The industry body said the EV segment has been besieged by irritants designed to disturb the momentum of the FAME 2 scheme.

"Now that the country is almost ready with the entire supply chain, the only thing holding up the sector is the Rs 1,200 crore worth of subsidies that have been withheld leading to a serious liquidity crisis in the industry," it said.

The need of the hour is for the government and the industry to work together to resolve issues and put India back on track to meet its electric mobility targets, the petition said. 

In December last year, Union Heavy Industries Minister Mahendra Nath Pandey informed Parliament that the government is probing 12 automakers for alleged misappropriation of subsidies under the Rs 10,000 crore FAME scheme.

The complaints received by the government mainly relate to a violation of Phased Manufacturing Programme (PMP) guidelines under FAME India Scheme Phase-II, he had stated.

The Ministry of Heavy Industries is implementing the Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME India Phase II) scheme to promote the adoption of electric/hybrid vehicles in the country. 

At present, Phase II of the FAME India Scheme is being implemented for a period of five years, from 1 April 2019 with total budgetary support of Rs 10,000 crore.
 
This Phase focuses on supporting the electrification of public and shared transportation through subsidies for 10 lakh e-2 wheelers (e-2Ws), 5 lahk e-3 wheelers (e-3Ws), 55,000 e-4 wheelers (e-4Ws) passenger cars, and 7,090 e-buses.

SMEV said the basis of the delay in the subsidies has been proven to be mischievous emails alleging non-adherence to policy norms as regards localisation targets.

The charge of misappropriation has since been found to be misplaced because the monies due as subsidies have not been received as yet by OEMs while they have passed it on to customers, it said.

"FY 23 for the industry has been a challenging year for the industry: First, due to the repercussions of two years of COVID disruptions, and then, due to the 12-month delay in subsidies," the SMEV said. 

SMEV believes that FAME 2 initiative is a path-breaking, pioneering policy architecture that has not only opened up the EV sector dramatically but has prepared the market to take off in full swing - provided a few irritants are resolved, it added.