Central Government Considers Legal Actions for FAME-II Funds From Electric 2W Companies

In a recent development, the Central Government of India is considering legal actions against 2-wheeler manufacturers for allegedly violating the FAME-II scheme subsidies. According to a report from the PTI, an official notice was issued to 7 electric 2-wheeler companies.

The notice demands the manufacturers to repay Rs 469 crore in subsidies, which were claimed incorrectly under the FAME-II scheme. The companies under scrutiny include - 

• Hero Electric
• Okinawa
• Ampere EV
• Revolt Motors
• Benling India
• Lohia Auto
• AMO Mobility

An official source informed PTI that among the companies that received notices, only Revolt Motors has proactively come forward to initiate the process of repaying the subsidies they had claimed incorrectly. 

Regrettably, the other manufacturers have not responded to the notices. It’s worth noting that the deadline for responding to these notices is imminent, and the government is poised to determine its course of action next week, which may include resorting to legal measures.

The issue of improper utilisation of FAME-II subsidies first surfaced late last year, prompting the Ministry of Heavy Industries to halt the disbursement of grants to manufacturers. Subsequent investigations by the Ministry uncovered that several companies had availed incentives under the scheme despite their products failing to meet the basic guidelines. Specifically, the scheme required certain vehicle components to be sourced and manufactured locally, and it has been alleged that certain companies found ways to ignore these regulations.

Earlier this year, prominent electric vehicle manufacturer Hero Electric disclosed that it had received correspondence from the government regarding models produced during the pandemic. The company maintained that its products adhered to all the FAME scheme requirements during that timeframe, contending that there was no basis for refunding subsidies. 

Similarly, Okinawa expressed reservations about the audit period, which covered 2020 and 2021. They cited the challenges all companies faced in sourcing certain components locally due to the constraints posed by the pandemic.

This situation underscores the government’s commitment to ensuring the integrity of subsidy programs like FAME-II and maintaining transparency & adherence to the prescribed guidelines within the electric two-wheeler industry. Further developments in this matter will be closely monitored as the government weighs its options in the coming weeks.

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