ARAI, ICAT officials under scanner for awarding FAME II incentives to EV makers

The Centre has launched an inquiry against officials for allegedly handing EV subsidies to manufacturers who had not met Faster Adoption and Manufacturing of Electric Vehicles norms. The officials, who are part of agencies like Automotive Research Association of India (ARAI) and International Centre for Automotive Technology (ICAT), have been alleged of offering FAME II subsidies to seven EV makers. These EV makers include the likes of Hero Electric and Okinawa Autotech among others. A probe conducted earlier had revealed these companies received fiscal incentives under the FAME II scheme by violating the norms.

According to the Heavy Industries Ministry, the ARAI and ICAT officials had shown lapses while offering FAME II subsidies to the seven EV manufacturers. As many as 13 EV makers, including Ola Electric, were named among possible defaulters in the case. The Centre had asked ARAI and ICAT to to investigate whether the manufacturers had followed localisation guidelines mentioned in the FAME II scheme. At the end of the investigation, seven EV makers were found to have violated the norms. "We are enquiring into the lapses, if any, by all officials involved in the process," said Union Heavy Industries Minister Mahendra Nath Pandey.

Earlier this year, the government issued notice to EV makers for violating localisation norms, a key requisite to avail benefits under the ₹10,000-crore scheme. The scheme clearly outlines that companies who can claim incentives under the scheme must produce electric vehicles by using made-in-India components. The Phased Manufacturing Plan (PMP) rules under the scheme was finalised to boost domestic manufacturing of electric vehicles.

The Centre had sought ₹469 crore from seven electric two-wheeler makers for claiming incentives while not complying with the FAME II scheme norms. Only Revolt Motors out of these seven EV makers has offered to refund the amount so far. Besides Hero Electric, Okinawa Autotech and Revolt Motors, the four other manufacturers named as defaulters are Ampere EV, Benling India, Amo Mobility and Lohia Auto.

The first of the FAME schemes was launched on April 1, 2015, with a total outlay of ₹895 crore in an effort to promote electric and hybrid vehicles faster. The FAME-II scheme was announced in 2019 with an outlay of ₹10,000 crore. According to the Society of Manufacturers of Electric Vehicles (SMEV), EV makers in India have suffered a loss of more than ₹9,000 crore on account of unpaid dues and loss of market after their subsidies were stopped last year.

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