Seven electric vehicle (EV) manufacturers operating in the two-wheeler segment, including well-known names like Hero Electric, Okinawa Autotech, and Revolt Motors, are currently seeking a waiver for the substantial ₹469 crore penalty imposed on them by the government. The penalty was a consequence of these companies wrongfully claiming subsidies under the FAME II (Faster Adoption and Manufacturing of Electric Vehicles) scheme.
The issue at hand pertains to these manufacturers assembling their electric vehicles in India using imported products, which made them ineligible for the government’s support under the FAME II scheme. To be eligible for subsidies and incentives, the FAME II guidelines require that the entire manufacturing process of electric vehicles be completed within the country.
In response to the penalties, the industry body Society for Manufacturing of Electric Vehicle (SMEV) approached the Prime Minister’s Office (PMO) and the Ministry of Heavy Industries seeking leniency and a waiver. However, it seems that the Union government is not inclined to provide any exemptions in this matter. The government has set a strict timeline of one week for the companies to repay the subsidy amount. Failure to comply within the given time frame will lead to the government initiating legal action and recovery procedures against the defaulting companies.
The Ministry of Heavy Industries had previously launched an investigation into the alleged misappropriation of subsidies under the ₹10,000 crore FAME scheme. The Phased Manufacturing Programme (PMP) guidelines of the FAME India Phase II scheme require manufacturers to ensure complete indigenization of their electric vehicles and their components. Unfortunately, several companies were found to be importing products and assembling them in India, thereby violating the critical indigenization norms.
According to Krishan Pal Gurjar, the Minister of State for Heavy Industries, the ministry received a total of 17 complaints related to violations of the PMP guidelines under the FAME India Phase II scheme. In response to these complaints, the models of two original equipment manufacturers (OEMs) have been suspended from the FAME scheme as a precautionary measure.
The companies facing penalties have been given an opportunity to demonstrate compliance with the PMP timelines by presenting sufficient evidence to the government. Upon verification and approval of their compliance, their pending subsidy claims will be processed. However, any company failing to meet the requirements and criteria will be subject to the government’s full legal action and recovery procedures to reclaim the wrongly claimed subsidies under the FAME II scheme.