PM E-Drive: Centre Tightens Localisation Norms For EV Component Suppliers

Following the FAME-II fiasco, the Centre has reportedly tightened the localisation norms for electric vehicle (EV) manufacturers seeking subsidies under the recently notified PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) scheme.

The beneficiaries of the EV promotion scheme will have to disclose the source of components and inform the ministry of heavy industries (MHI) in case of any changes, Economic Times reported citing officials. 

The Centre will also have the right to clawback subsidies availed in violation of the norms of the scheme. As per the rules, testing agencies will also have the right to inspect the premises of EV component suppliers providing parts to beneficiaries of the scheme.

“EV parts shall be domestically procured. Some components will require safety testing as well,” the report quoted a senior official as saying. 

The scheme will have a phased manufacturing programme (PMP) for EV components suppliers. This programme, which equates assembly with manufacturing, will come into effect from April 1, 2025, the report said.

The development comes at a time when the sales of EVs are on the rise in the country on the back of support from Centre and state governments and declining costs. The PM E-DRIVE scheme, approved by the union cabinet last month, is a step to further increase the penetration of EVs.

The scheme will last for nearly two years and has a budgeted outlay of INR 10.900 Cr to promote EVs by providing subsidies to manufacturers, bolster charging infrastructure, and spur local manufacturing.

The latest development also comes on the back of multiple issues found with the previous EV promotion scheme, FAME-II. The Centre found that EV manufacturers like Ola Electric, Hero Electric, among others, availed subsidies in violation of localisation and other norms of FAME-II. These companies were asked to return the subsidies, while the government also slapped fines on many of them.