Indian EV body backs companies under scanner for alleged misuse of FAME subsidy

The Society of Manufacturers of Electric Vehicles on Thursday hit out at the government for holding back incentives under the FAME II scheme.

In response to a reply made by Union Heavy Industries Minister Mahendra Nath Pandey in the Lok Sabha on Tuesday that the ministry has received complaints regarding misappropriation of subsidies under the FAME India Phase II scheme by some electric vehicles manufacturers, the industry body said the allegation is "invalid in the context of the issue at hand."

The government is probing 12 automakers, including Hero Electric and Okinawa Autotech, for alleged misappropriation of subsidies under the ₹10,000 crore FAME II scheme.

In a statement, Society of Manufacturers of Electric Vehicles (SMEV) Secretary General Ajay Sharma said due to the impact of Covid-19, the Phased Manufacturing Programme (PMP) guidelines under FAME India Scheme Phase-II were expected to be revised but for various reasons were not modified "in spite of clear indications that these could not be met."

He further said due to backlog and under-development of the EV ecosystem, ancillary component makers failed to meet the "harsh targets of PMP" both in quality as well as quantity terms.

At the same time, original equipment manufacturers (OEMs) were allowed to operate and sell with their vehicles and production verified as per the testing protocols under the scheme, while even giving them extensions in view of the delays at the supply chain.

"These extensions did not do much for the situation because of the underlying COVID impact on the market and production, which the policy and the department failed to address," Sharma said, adding OEMs were, however, passing the subsidies to customers from their own funds for more than a year.

"If there is any misappropriation, it is in the ₹1,100 crore held back by the department that is owed to OEMs in lieu of the above expenditure," he said.

Sharma further said if there has been any misappropriation, "it is in the policy that has been thrust in the face of the supply chain, which could not respond to the impractical norms. OEMs do not run the supply chain."

Moreover, he said, "If there is any misappropriation, it rests in the hands of customers who have bought these EV scooters and who provided these subsidies on orders of the department."

Under the scheme, electric two-wheeler makers are required to have at least 50 per cent localisation of components to avail of the subsidy.

On Tuesday, Pandey had stated that the government received complaints mainly related to violation of Phased Manufacturing Programme (PMP) guidelines and it had been referred to the testing agencies for re-verification.

Following this, in respect of two OEMs their models have been suspended from the FAME scheme and processing of their pending claims has been stopped till they submit sufficient evidence to show their compliance to PMP timelines, he had said.

The other OEMs against whom complaints have been received include Benling India Energy and Technology; Okaya EV; Jitendra New EV Tech; Greaves Electric Mobility (formerly Ampere Vehicles Private Limited); Revolt Intellicorp; Kinetic Green Energy & Power Solutions; Avon Cycles; Lohia Auto Industries; Thukral Electric Bikes; and Victory Electric Vehicles International.