Hero Electric Agrees To Pay Penalties For FAME-II Violations

Electric vehicle (EV) maker Hero Electric has reportedly knocked on the doors of the Ministry of Heavy Industries (MHI) to settle the ongoing disputes involving misappropriation of FAME-II subsidies. 

Sources told Economic Times that the EV maker has agreed to pay penalties for any violation or lack of compliance related to the EV subsidy scheme. 

“Hero Electric has approached us seeking a resolution of their pending issues…We are examining their request,: a government official reportedly said. 

As per the report, Hero Electric’s fresh communication to the Ministry suggested six options including imposition of fine, adjustment of subsidy amounts, third-party reinvestigation, mediation, vehicle retesting, and plant retesting to settle the dispute. 

The EV manufacturer also reportedly indicated its willingness to undertake “any other remedial method as may be suggested by the ministry”. Additionally, the company has also sought release of pending penalties. 

In its communication, it sought reversal of the company’s blacklisting from availing new EV sops and allowing it access to the National Automotive Board (NAB) portal for processing pending subsidies.

At the heart of all this is the second phase of the Centre’s Faster Adoption and Manufacturing of Electric Vehicles in India (FAME) scheme, which subsidises the sale of EVs. A subsequent probe found that as many as five players including Hero Electric in violation of mandatory localisation norms.

Thereafter, authorities launched a clampdown on these original equipment manufacturers (OEMs) and ordered them to refund subsidies availed under the scheme. Hero Electric was ordered to return sops worth INR 133 Cr and additional interest over alleged violation of FAME II norms.

While many EV makers returned the subsidies, Hero Electric contested the government’s claims and sought the release of INR 556 Cr as pending subsidies against sales already made. 

However, the U-Turn comes close on the heels of the MHI unveiling the INR 10,000 Cr PM E-DRIVE scheme, which effectively replaces the FAME-II scheme, and offers sops to subsidise EV purchases.

Owing to the government crackdown, Hero Electric has been barred from availing this scheme, which could make its products pricier for end consumers. It is this blacklisting that the company aims to reverse.