FAME-II: Govt To Release INR 500 Cr Subsidy To Ola, Ather, TVS, Hero MotoCorp

The government has reportedly decided to release over INR 500 Cr of FAME-II subsidy to four electric two-wheeler manufacturers – Ola Electric, Ather Energy, TVS Motors, and Hero MotoCorp – after they agreed to reimburse monies to customers who were made to pay extra for chargers.

Government sources aware of the development told TOI that Ola Electric would get the highest payout of around INR 370 Cr from the Ministry of Heavy Industries (MHI). Meanwhile, Ather Energy is set to receive about INR 275 Cr. TVS is likely to get subsidy reimbursement to the tune of INR 150 Cr or more. For Hero MotoCorp, the payout amount would be INR 28-INR 30 Cr.

The development comes a week after reports said that these players have agreed to pay the penalties following months of investigations into allegations of manipulation of prices of vehicles. The four electric two-wheeler manufacturers were allegedly billing escooters chargers and proprietary software separately as accessories in order to keep the vehicle prices under the INR 1.5 Lakh cap of the FAME-II scheme.

It must be noted that the scheme, with a total outlay of INR 10,000 Cr, provides electric two-wheelers with a maximum subsidy of 40% on the total cost of the vehicles, provided their maximum ex-factory price is INR 1.5 Lakh per unit.

While there has been no direct and public communication from the MHI so far on the matter, as per a report, Ola Electric, Ather Energy, TVS Motors, and Hero MotoCorp together agreed to refund an aggregate amount of about INR 288 Cr to their customers.

In that, Ola Electric would refund INR 130 Cr to 1 Lakh Ola S1 Pro customers, while Ather Energy would refund INR 140 Cr to 95,000 Ather 450X consumers.

While both the EV startups have not yet disclosed the amount to be refunded, they have publicly disclosed the decision to initiate refunds. 

The ongoing problems around FAME-II have already impacted the sales growth of most of the two-wheeler EV manufacturers. Besides vehicle price manipulation, investigations are also going on against 14 other electric two-wheeler manufacturers for flouting localisation norms of the scheme.

Hero Electric and Okinawa were the first two to come under the scanner for violation of localisation requirements and they have been reportedly slapped with a total fine of INR 249 Cr. 

The government’s decision to disburse the subsidies to the manufacturers comes days after industry body Society of Manufacturers of Electric Vehicles (SMEV), in a letter written to a parliamentary committee, criticised the Centre for the delay and lack of communication on the matter.

The industry body claimed that two-wheeler EV OEMs had not received subsidies for 4.5 Lakh vehicles while they had passed on the benefits of most of this to their customers as discounts.

The Centre has allocated INR 5,172 Cr for FAME-II in FY24, including unused allocations of the previous years and subsidy in excess of INR 1,100 Cr which the government did not disburse in FY22 and FY23, as per an industry expert.