The drastic measures of the government are responsible for the decline in the production of electric vehicles in January

- The country cannot afford to reduce its production when electric vehicles are still an emerging sector

According to a recent report, the Ministry of Heavy Industries has widened its probe into irregularities in subsidies under the FaM (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) scheme for electric vehicle manufacturers to find out why some manufacturers of electric two-wheelers have violated the maximum price ceiling. To clarify. Last year too, action was taken against manufacturers for flouting norms for using local raw materials, and testing and certification standards were tightened after the fire incidents, with changes in safety standards.

As per the FAME standard, the subsidy provided to manufacturers of electric two-wheelers has been linked with a condition of capping the ex-factory price. But after receiving complaints that manufacturers of electric two-wheelers were violating the price cap norms, an inquiry has been conducted and clarifications have been sought from the manufacturers. Subsidies and price caps have been added as part of increasing attractiveness of electric two-wheelers and making them available at affordable prices. There have been complaints that two-wheeler manufacturers are benefiting from subsidies by excluding EV chargers and intrinsic essential software, which are key components of the vehicle and without which the vehicle cannot run. At least 15 of the 64 vehicle manufacturers are reported to have been deprived of the subsidy.

According to the latest figures, the retail market share and sales of electric vehicles have seen a decline in January after seeing a huge increase last year. Arguments are being made that this decline is due to the withholding of subsidies under FEM-2. As the government is trying to spread electric vehicles in the country, this decline does not give a good indication.

In November last year, sales of electric vehicles stood at an all-time high with 119,483 units. Statistics show that the sales figure for January was 100,852 units. Compared to ICE vehicles, there has been a decline in the sales of all types of electric vehicles.

The share of electric vehicle in two wheelers which was 5.70 percent in December has decreased to 5 percent in January. Today the share of three wheelers has also decreased from 50 percent to 53.30 percent. The figures also show that this level has come down from 1.30 percent to 1 percent in Utaru vehicles.

It may be mentioned here that in order to increase the spread of electric vehicles in the country, the government has doubled the allocation for FAME scheme in the budget of the next financial year and has given relief in customs duty for the production of lithium ion batteries.

A list by FADA said that auto retail sales increased by 14 percent in January as a result of massive sales of off-road vehicles, two-wheelers and tractors. The government's strictness towards the emerging sector for electric vehicles is likely to slow down the investments coming in the electric vehicle sector. Earlier there were allegations that subsidies worth Rs 1,100 crore to promote electric vehicle production were withheld by the Ministry of Heavy Industries. Last year, the Society of Manufacturers of Electric Vehicles, in a letter to the Centre, had said that an unprecedented situation has arisen for almost every major manufacturer of electric two-wheelers withholding subsidies. It was also defended that the move to stop subsidies unilaterally would hit the manufacturers of electric vehicles. Under the FAME scheme, the subsidy amount is credited to the manufacturer's account after the sale of the electric vehicle. Keeping in view the growing demand for electric vehicles, the business of charging stations for electric vehicles in the country will require an investment of over Rs 1 lakh crore in the next decade and investors are also coming forward for this. Demand for electric vehicles is also expected to grow at a CAGR of 39 percent over ten years.

Electric vehicles accounted for 2.50 percent of the total sales of new vehicles in the country last financial year. In fiscal 2021, the sales figure was less than one percent. Subsidies and other incentive schemes may be responsible for the increased production of electric vehicles, but India ranks eleventh out of fifteen countries in terms of readiness to make a strong move towards electric vehicles. Thus, India is still lagging behind in terms of the spread of electric vehicles.

Due to high global crude oil prices, the fiscal calculations of many countries of the world, including India, have been disrupted. If such calculations are to be prevented in the future, it is necessary to reduce the consumption of petrol-diesel in vehicles or even the dependence on it. If the country's economy is to be sustained even without petrol-diesel, its first condition is to adopt a liberal attitude towards manufacturers along with the incentives given to the electric vehicle sector.

Entrepreneurs in the emerging electric vehicle sector in the country will come forward to invest only when they are assured of sufficient cooperation from the government. A concerted solution to the government's strict enforcement of subsidies before it affects the production of electric vehicles will speed up the migration to electric vehicles in the country, otherwise the development of this sector may not be seen at a snail's pace.