Government may stop providing subsidies to EV OEMs who violate FAME-II standards
- ByStartupStory | November 10, 2022
According to a senior government official who spoke on condition of anonymity, if businesses are found to have violated the localization requirements of the flagship Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (Fame) scheme during the ongoing investigation, they may be fined, prohibited from participating in the programme, and the Center may also be able to recoup the subsidies they received. Hero Electric and Okinawa have both responded following letters that the ministry of heavy industries sent them for alleged violations of the FAME II criteria, according to a second official who also asked to remain anonymous.
According to the second official, more businesses are being investigated for allegedly importing all or the bulk of the components needed to construct electric 2-wheelers locally but yet claiming benefits from the plan. The action goes against the Fame-II scheme’s localization standards, which call for at least 50% local sourcing.
“An investigation is in progress. Our stance is that machinery must be produced in India. In keeping with the “Make in India” philosophy, we are making progress. We learned that certain businesses were importing goods and marketing them as Fame in India. The subsidies have been suspended while those problems are looked at, according to the first official. The Indian Automotive Research Association (ARAI) is looking into the alleged infractions. “If any company is proven to be at fault, we will fully adhere to the rules. Anyone who refuses will face severe consequences from us. We shall carry out all necessary actions. If they are proven guilty, we will collect the subsidy and they risk being blacklisted from Fame-II and other government programmes, the official continued. The Center has so far stopped providing Hero Electric and Okinawa Autotech with subsidies. After the high-level committee has finished its investigation, further action will be taken on the issue.
In response to a question, Okinawa founder and managing director Jeetender Sharma stated: “We have been adhering to all government-notified criteria and have been following the Fame-II guidelines. To the satisfaction of the testing organisations, we provided all the documents. As required by the government, we have a 50% DVA. We are still providing dealer and customer subsidies at this time. At Okinawa, we make sure that all of our goods and procedures adhere to the highest standards of quality.
A Hero Electric spokeswoman responded to the inquiry by saying, “At Hero Electric, we assure strict adherence to the highest quality and safety requirements. Our whole process and product portfolio comply fully with the law, and the majority of our product line has received CMVR certification and has been properly registered with the relevant authorities. We diligently sent the entire subsidy amount to the consumer as a leader in our sector. Till publication, inquiries submitted to the ministry of heavy industries were unanswered. Given that EV 2-wheelers are more expensive than conventional vehicles with internal combustion engines, the government established the Fame programme to assist people who wish to purchase these vehicles (ICE). The second phase of the programme, known as Fame-II, began in April 2019 and provides customers with an upfront cash discount on the purchase of EVs worth up to 40% of the vehicle’s price. The provided subsidy is 15,000 per kilowatt-hour (kwh). OEMs are required to raise their monthly invoices in order to obtain the government discount that is offered to customers. Through this plan, they gain since higher sales are made possible by lower showroom prices. The government also implemented a strengthened vigilance process in response to complaints regarding non-compliance with localization standards.
The ministry has implemented a “faceless” technique as of 1 October for gathering domestic value-added data and phased manufacturing plans from OEMs by integrating their enterprise resource planning (ERP) software with the government’s application programming interface. Under the production-linked incentive programme for automobiles, domestic value-addition data will be collected before incentives are paid out, whereas phased manufacturing plan data will be collected for Fame-II payments.
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