New Delhi: A brand new scheme with a brand new title. The Electrical Mobility Promotion Scheme 2024 (EMPS) requires automobile producers to get recent automobile certification, disqualifies 4 wheelers and buses from availing subsidy and reduces the general quantum of subsidy for 2 wheelers. So whereas the EMPS could also be seen as an extension of the Sooner Adoption and Manufacturing of Electrical Autos (FAME) II, which is about to finish on March 31, the brand new scheme brings a number of ache factors for the electrical automobile trade.The EMPS was notified on Wednesday night after the Union Cupboard cleared it earlier within the day. The scheme has an outlay of INR 500 crore for 4 months until July 31 and about 3.72 lakh electrical two and three-wheelers will likely be offered subsidy. This scheme has come after persistent trade demand for continued incentivisation of EV buy, particularly by electrical two wheeler OEMs, however its contours have already began creating discomfiture inside the trade.
First, exclusion of 4 wheeler producers from any subsidy on sale of electrical automobiles has raised some eyebrows. Distinguished OEMs resembling Tata Motors had been vocal prior to now concerning the want for subsidy in order that the distinction within the value of an electrical and ICE 4 wheeler could possibly be narrowed down. However the authorities has pushed 4 wheelers out of the subsidy regime, not less than for now, and pointed in direction of the Manufacturing Linked Incentive (PLI) which a few of the OEMs are already availing. Underneath the PLI Scheme, the federal government gives incentives to fabricate electrical automobiles. An trade supply stated although that the 4 wheeler OEMs “shouldn’t be too perturbed since incentives beneath PLI are much better than the subsidy cap of INR 1.5 lakh per automobile for 4 wheelers”.
Second, the most important ache level for the electrical two wheeler trade – which accounts for the most important element of subsidy beneath FAME II in addition to EMPS – is the availability of recertification of the OEM in addition to every product for which subsidy could possibly be claimed.
The gazette notification launch final night specifies that “With a view to avail demand incentive, OEM is required to be registered with MHI (Ministry of Heavy Industries). Additional, after registration of the OEM, every of their EV fashions will have to be accepted by MHI.”
Nikhil Bhatia, Co-Founder and COO of HOP Electrical Mobility, advised ETAuto that “The brand new EMPS 2024 scheme notified for 4 months helps trade take care of uncertainty however the trouble of re-certifying the automobiles might have been prevented by merely extending the automobiles already licensed beneath the sooner scheme. We hope that the re-certification course of is fast because the scheme validity is just for 4 months.”
Certification has been a significant stumbling block prior to now as effectively. In 2022, 13 e2W producers had been first slapped with penalties after which denied subsidy reimbursements by the federal government over allegations of misappropriation of subsidies. The allegations pertained to lower-than-mandated ranges of localisation by the OEMs. Later, many discrepancies had been present in your entire certification course of itself.
The truth is, when the ministry started a crackdown towards the e2W startups, alleging subsidy misappropriation in April 2022, questions additionally arose about how the disbursal continued via the preliminary months of that 12 months if there have been certainly violations of localisation norms? Questions additionally pertained to authorities’s personal testing companies not flagging the insufficient localisation subject since subsidies had been contingent upon checks carried out by these very testing companies? So even because the MHI stopped subsidy disbursements pending an enquiry, the e2W OEMs continued to pay the subsidies from their very own pockets to maintain up gross sales whereas demanding resumption of the funds from the federal government. Questions additionally arose over selective punitive motion towards particular OEMs.
So the trade’s frowns over re-certfication to qualify for EMPS appear justified.
Third, what occurs to automobiles which have already been manufactured by the OEMs in March, shipped to dealerships and will not get bought by month finish (when the FAME II scheme ends)? These automobiles are being bought at discounted costs, internet of subsidy, as of now. However automobiles which don’t get bought by thirty first could not qualify for subsidy since EMPS kicks in from April one. The trade is wanting in direction of MHI for a clarification that automobiles manufactured in March may also be eligible for subsidy beneath the brand new scheme.
Fourth, the quantum of subsidy accessible to a two-wheeler OEM has been slashed beneath EMPS. The notification says that now, two wheelers are eligible for INR 5000 per kwH and the subsidy is capped at INR 10,000 per automobile with the manufacturing unit value of the automobile not exceeding INR 1.5 lakh. Whereas some OEMs are heartbroken on the steady discount in subsidy quantity, some others appear okay with this since the price of manufacturing has additionally come down over time.
One trade government stated that the price of manufacturing has lowered considerably because the trade achieved economies of scale and costs of some crucial parts, resembling batteries, crashed. Right now, batteries account for almost a 3rd of the price of making a two wheeler versus about half the associated fee some years again. The subsidy quantity has additionally been reduce steadily, from about 45% of the automobile price or INR 30,000 per kWh initially, then lowered to INR 15,000 per kWh and and now to INR 5,000.
The notification for EMPS specifies that greater than 3.3 lakh electrical two wheelers will likely be supported beneath the brand new scheme, 13590 e-rickshwas and 25,238 three wheelers will likely be eligible to say subsidy.
The federal government has constituted an inter-ministerial empowered committee, headed by the secretary of MHI for monitoring, sanctioning and implementation of EMPS. Different members of this committee are the NITI Ayog CEO, monetary advisor and extra secretary in MHI, director of the Vehicle Analysis Affiliation of India (ARAI) and secretaries of the ministries of petroleum and pure fuel, non-renewable power, housing and concrete affairs, energy, financial affairs and the division for promotion of trade and inside commerce.
It’s only correct that the federal government has introduced such a heavy oversight of subsidy disbursal beneath EMPS, given the misappropriation allegations beneath FAME II and the next goings on.
