EV Makers body petitions NGT for green tax on fuel-based two-wheelers

The Society of Manufacturers of Electric Vehicles (SMEV) has lodged a petition with India's National Green Tribunal (NGT) in response to the government's recent announcement to reduce subsidies for electric vehicles (EVs) through its Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) program.

Additionally, SMEV opposes the introduction of a "Green Tax" on two-wheeled vehicles running on conventional fuels. According to SMEV, these policy changes will disrupt the EV sector in India and have a detrimental impact on the environment and public health.

SMEV expressed its concerns to the NGT, highlighting the potential adverse consequences of the Ministry of Heavy Industries' decision to decrease FAME II subsidies. The association believes that this move will impede the growth of the EV sector in India and subsequently affect the country's environmental and health indicators.

The sudden reduction in subsidies by 75% has caught many EV manufacturers off guard, causing financial strain and uncertainty.

In response to these developments, SMEV has urged the NGT to support the implementation of a Green Tax on two-wheeled vehicles fueled by conventional sources. The association believes that such a tax would incentivize the adoption of green vehicles, aligning with the national objective of environmental preservation and pollution reduction.

SMEV Secretary General Ajay Sharma emphasized that electric vehicles are subsidized globally to encourage a transition toward cleaner energy systems. The recent decision by the Ministry of Heavy Industries appears contradictory to this global trend, defying logic and the principles of law.

The EV manufacturers, relying on government support, have invested significantly in shifting technologies, workforce, capital, and enterprise toward the EV sector. However, the abrupt reduction in subsidies has put immense financial pressure on original equipment manufacturers (OEMs). Over Rs 1,200 crore in subsidies are currently withheld, and retrospective payback demands for subsidies granted in 2019 have been made. The financial stress caused by these actions has left many OEMs struggling to cope. SMEV warned that if the situation persists, OEMs may face closure due to the lack of working capital, loss of investor and bank support, delays in production timelines, and a rapidly shrinking distribution network.

The government's decision to curtail subsidies for EVs and introduce a Green Tax on fuel-based two-wheelers has sparked a significant backlash from the EV manufacturing sector. The matter now rests with the NGT, where a decision will be reached concerning the future of these policies and their potential impact on the country's transition toward greener transportation options.

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