SFIO Says Hero Electric, Benling & Okinawa Violated FAME-II Norms

The Serious Fraud Investigation Office (SFIO) said it conducted search operations at the premises of electric two-wheeler manufacturers Hero Electric, Benling India and Okinawa Autotech and found that they availed subsidies worth INR 297 Cr under the FAME-II scheme in violation of the norms.

In a statement, the SFIO said that in its search operations, conducted on December 2, it found that the three companies had “deceptively” shown compliance with the applicable guidelines to the heavy industries ministry. 

The statutory agency also recovered evidence like digital data, books and other material to support its investigation. 

“Upon investigations by SFIO, it is revealed that several restricted parts under the PMP guidelines were either directly or indirectly imported from China thereby flouting the PMP guidelines under FAME – II,” a statement from the corporate affairs ministry said. 

This comes a few days after the agency sealed Hero Electric’s Gurugram premises in relation to the case. Earlier in October, it was reported that Hero Electric had agreed to pay penalties for any violation or lack of compliance related to the EV subsidy scheme. 

Back then, the company was said to have suggested six options to the ministry, including imposition of fine, adjustment of subsidy amounts, third-party reinvestigation, mediation, vehicle retesting, and plant retesting to settle the dispute. Given the SFIO’s ongoing investigation, it is not clear if the ministry paid heed to the offer. 

Earlier in August, Okinawa approached the Delhi High Court seeking  to restrain the Centre from recovering subsidies worth INR 116.8 Cr disbursed to it under the FAME-II scheme. The HC, however, rejected the plea on August 5.

At the heart of the case are the findings of the heavy industries ministry related to violation of FAME-II norms by Hero Electric, Okinawa Autotech, Ampere Vehicles (Greaves Cotton), Benling India, Revolt Intellicorp and Amo Mobility. In May 2023, the ministry sent the aforementioned companies show-cause notices. 

A year later, it issued debarment orders against Hero Electric, Okinawa and Benling. 

The government approved Phase II of the scheme with an outlay of INR 10,000 Cr for three years in 2019. Later, it was extended until March 31, 2024, and a four-month programme called the Electric Mobility Promotion Scheme (EMPS). 

Earlier this year, the Centre remodelled the FAME scheme to PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) Scheme. 

The scheme, which was launched in September, has an outlay of INR 10,900 Cr for a period of two years. It will see the government provide subsidies and demand incentives worth INR 3,679 Cr for electric two-wheelers (E2Ws), three-wheelers (E3Ws), ambulances, trucks and other emerging EVs.