FAME-II Subsidy Issue: After Penalising OEMs, Centre Probing Role Of Govt Officials

After penalising several electric vehicle (EV) original equipment manufacturers (OEMs) for misappropriation of FAME-II subsidy, the Ministry of Heavy Industries (MHI) has started scrutinising the government officials responsible for the irregularity.

As per media reports, MHI secretary Kamran Rizvi informed journalists recently about the same.

“The ministry has started the investigation in the cases of subsidy violation. Procedural lapses and role of officers that led to the funds wrongly being disbursed will be probed,” Rizvi was quoted as saying by multiple publications.

The probe is also looking into the role of organisations like the International Centre for Automotive Technology (ICAT) and the Automotive Research Association of India (ARAI) in the same.

The development comes months after EV OEM majors were fined crores of rupees for violation of the norms while claiming FAME-II subsidies. The government had discovered two different kinds of violations by the companies. 

More than a dozen EV OEMs, including Hero Electric, Okinawa Autotech, Ampere, and Revolt, were fined INR 469 Cr in total for flouting localisation norms under FAME-II.

Besides, four OEMs – Ola Electric, Ather Energy, TVS, and Hero MotoCorp’s Vida – were ordered to pay INR 288 Cr cumulatively to customers for artificially keeping the vehicle prices lower to claim the subsidy benefits while billing the customers separately for chargers. 

As per reports, a majority of the OEMs have repaid the amounts to the customers. The MHI is pursuing the rest to repay the wrongly claimed subsidies by the end of this year.

As a result of this entire investigation, which began towards the end of last year, and the after effects, the sales of electric two-wheelers in the country were also negatively affected.

Following this, several OEMs, particularly in the premium category, also raised the prices of their vehicles. 

However, following the FAME-II fiasco, premium category escooter players such as Ola Electric, Ather Energy, and TVS Motors, among a few others, have continued to witness an upsurge in the demand for their vehicles, while low-speed, budget escooter OEMs like Hero Electric and Okinawa have seen a sharp decline in their sales.