Centre Mulls Action Against Hero Electric, Okinawa And Benling India For Not Repaying FAME Subsidy

The Centre is considering legal action against Hero Electric, Okinawa Autotech and Benling India for not repaying the subsidies they wrongly obtained under the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) scheme to promote electric mobility.

Following unsuccessful attempts by the Ministry of Heavy Industries to recover the disputed amount from these companies, the decision to pursue legal action has been taken, ET reported.

The ministry might involve agencies like the CBI or Enforcement Directorate to probe subsidy misuse under the FAME scheme, for in-depth investigation, and to establish criminal intent.

The government is expected to recover approximately INR 155 Cr from Hero Electric, INR 125 Cr from Okinawa and INR 50 Cr from Benling, as per the ministry’s estimates. Among the list of companies accused of wrongfully claiming subsidy amounts, Hero Electric, Okinawa Autotech, and Benling India rank among the top defaulters.

Apart from Hero Electric, Okinawa Autotech, and Benling India, the government had also issued recovery notices to Ampere EV, Revolt Motors, Lohia Auto, and AMO Mobility. These companies have resolved the issue by refunding the subsidy along with penal interest, the report said.

“Benling India maintains that it has diligently adhered to the guidelines and requirements set forth by the FAME II scheme,” said Amit Kumar, CEO of Benling India.

According to Kumar, Benling India sold 29,803 electric two-wheelers between June 2020 and May 2023 under the FAME II scheme. However, the company received subsidy payments for only 19,986 vehicles. Consequently, an uncleared subsidy amount of INR 42.48 Cr is pending with the government.

Hero Electric said that it has been in active discussions regarding this issue for over 18 months. The company claims to have publicly stated its position and expressed its dedication to resolving the issue.

The startup has offered several proposals for reaching an agreement, and it has provided evidence to the Ministry of Heavy Industries demonstrating their compliance with FAME guidelines, Hero Electric claimed.

“The matter is currently sub judice and we await further instructions from the honourable high court,” Okinawa Autotech said.

It was reported last year that the government was planning to initiate the recovery of wrongly claimed subsidies by EV manufacturers under FAME Scheme.

The Ministry of Heavy Industries started the process of verifying the quantum of subsidy used by EV two-wheeler manufacturers who did not adhere to the specified degree of localisation mandated by the government for availing the monetary benefits under the scheme.

Under the government’s FAME-II scheme, domestic EV makers are allowed to offer a discount of up to 40% on the cost of their vehicles and claim it from the government as a subsidy. However, EV manufacturers also need to ensure that at least 50% of products use locally-manufactured components to claim the subsidy.

After receiving complaints about manufacturers flouting FAME-II norms, the Indian government started to examine the matter in 2022.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.