Centre to Take Legal Action Against Defaulters of FAME 2 Subsidy

The government expects to recoup total of Rs 310 crore from alleged FAME 2 defaulters - Hero Electric, Okinawa, and Benling India

The government is considering legal action against three electric vehicle (EV) manufacturers as they failed to return incentives wrongfully claimed under the Faster Adoption and Manufacturing of Electric Vehicles in India (FAME 2) scheme. It alleges that Hero Electric, Okinawa Autotech, and Benling India are yet to reimburse subsidies valued at around Rs 310 crore, which were received wrongfully.

The Ministry of Heavy Industries is considering legal action to address the issue, as it has tried several times to recover the disputed amounts from these companies. However, it was to no avail.

Moreover, there is a possibility that the ministry will seek the help of agencies like the CBI or Enforcement Directorate to conduct a thorough investigation into the misallocation of subsidies under the FAME scheme. The purpose of this action could be to investigate whether there was any criminal intent behind the subsidy default.

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As per the ministry’s estimates, the government aims to recoup about INR 155 Cr from Hero Electric, INR 125 Cr from Okinawa, and INR 50 Cr from Benling. On the other hand, by refunding the subsidy and penal interest, companies such as Ampere EV, Revolt Motors, Lohia Auto, and AMO Mobility have resolved their issue.

In response to ET, Amit Kumar, CEO of Benling India, said that the company has complied with the guidelines and requirements of the FAME II scheme. He clarified that Benling India sold 29,803 electric two-wheelers under the scheme. However, it only obtained subsidy payments for 19,986 vehicles. That means there is still an outstanding subsidy amount of INR 42.48 Cr.

According to Hero Electric, the company has been involved in the ongoing matter for around 18 months and has suggested several proposals to address it. Moreover, the company claims it has presented evidence to the Ministry of Heavy Industries, indicating its adherence to FAME guidelines.

Okinawa Autotech stated that the issue is currently under legal review. It implies that the company is awaiting further instructions from the high court regarding the matter of subsidy repayment.

FAME 2 Scheme

The FAME 2 scheme, initiated in 2019, had a budget allocation of Rs 10,000 crore. Initially planned for a three-year duration, the scheme underwent a two-year extension. Originally, it aimed to promote 7,000 e-buses, 5 lakh e-3 wheelers, 55,000 e-passenger cars, and 10 lakh e-two wheelers.

However, the centre announced an increase in the program’s budget last month from Rs 10,000 crore to Rs 11,500 crore. The updated budget allocated Rs 7,048 crore for electric two-wheelers and three-wheelers,

It is important to highlight that FAME II faced scrutiny when numerous electric two-wheeler companies failed to comply with the localization clause.

The government’s decision to pursue legal action against defaulters under the FAME scheme shows its commitment to regulatory adherence. Furthermore, it highlights its dedication to promoting the expansion of electric mobility nationwide.