New Delhi, May 9 (KNN) Original Equipment Manufacturers (OEMs) in the electric vehicle industry are unlikely to receive relief from the Centre regarding the sale of vehicles manufactured before March 31, which would have qualified for benefits under the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme.

Despite appeals from industry stakeholders, the Ministry of Heavy Industries (MHI) remains firm in its stance, according to sources familiar with the decision.

"No relief could be provided to OEMs because the timeline was clear from the inception of the scheme," said a senior official.

The FAME corpus has an undisbursed amount of Rs 1,271 crore, which the OEMs had hoped to utilise for their request. A consortium of OEMs had appealed to the MHI, seeking an extension to facilitate the sale of their FAME-compliant vehicles manufactured before March 21, 2024.

The OEMs argued that these vehicles were produced with the intention of availing FAME incentives and utilising indigenous components, resulting in higher manufacturing costs compared to their non-FAME compliant counterparts.

Adherence to the FAME scheme's phased manufacturing programme guidelines, which mandated a 50 per cent localisation requirement, significantly escalated the manufacturing costs of their vehicles, according to the EV manufacturers.

Industry sources indicate that major OEMs, including Mahindra, Omega Seiki Mobility, OLA, and others, had approached the government seeking relief.

One source from a major e3W company stated, "We are faced with the dilemma of either selling at a loss or recalling our products from dealers and reconfiguring them with cheaper imported parts to maintain cost competitiveness."

The FAME-II scheme, which commenced in April 2019 with an outlay of Rs 10,000 crore for three years, was extended to March 2024. However, the government has clarified that there will not be another phase of the scheme post the March deadline.

On March 13, the Centre announced a new scheme called the Electric Mobility Promotion Scheme (EMPS), 2024, aimed at fostering the sale of electric two-wheelers (e2W) and three-wheelers (e3W), with an allocation of Rs 500 crore to support around 400,000 vehicles over four months.

Government officials argue that funds under the FAME scheme have already been exhausted, making it impossible to provide incentives beyond the allocated budget. Data from the MHI shows that the Centre spent Rs 10,253 crore of the total Rs 11,500 crore allocated for the five-year scheme, supporting 1.5 million vehicles over the past five years.

"Some funds will be allocated to provide incentives to manufacturers who sold their vehicles in the previous financial year but applied for incentives later. We do not have funds to accommodate more vehicles," a senior official said, emphasising the depletion of the allocated funds.

As the deadline approaches, the government maintains its stance on the timeline, while OEMs grapple with the dilemma of either selling at a loss or reconfiguring their products to remain cost-competitive in the absence of incentives.

(KNN Bureau)