SUMMARY
As of now, the government is probing around 18 companies to ensure that the subsidies under the FAME II scheme were rightly claimed
The government has onboarded accounting services firm EY for a financial audit of all beneficiary companies
The total amount of subsidy withheld has crossed INR 1,000 Cr
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The government has started a more extensive investigation of electric two-wheeler makers that have wrongfully claimed sops under the FAME II scheme. Now, another half a dozen companies are being investigated.
Currently, the government is probing around 18 companies to ensure if the subsidies were rightly claimed, Financial Express stated in a report. The total amount of subsidy withheld has crossed INR 1,000 Cr, as per the report.
The government has also onboarded accounting services firm EY for a financial audit of all companies that claim to be the beneficiaries of the FAME-II scheme.
“EY wants to check our books of accounts for any misappropriation of the subsidies we claimed under the scheme. While no subsidies have been released since April, they have asked for financials of October and November too,” said a senior executive of a company whose subsidies have been stopped.
Last October, the Ministry of Heavy Industries sent notices to several electric vehicle (EV) makers, asking them to furnish documents to back their claims to avail the benefits provided under the scheme.
The ministry wanted to check if the components used in the vehicles being produced by EV makers were sourced largely locally. The scheme stipulates that at least 50% of the total value added to an EV should be done locally by EV companies to receive the subsidy, reducing the final price for the end customer.
Last year, the government put the subsidies on hold for two EV makers, Hero Electric and Okinawa. The subsidies would be resumed if they produce the necessary documents as proof of meeting the local value-addition requirements.
According to manufacturers, production and despatches to dealers declined in December and January, as companies are not willing to continue production without subsidies. Therefore, battery makers are witnessing a sharp dip in fresh orders.
Despite several difficulties, the total number of electric vehicles registered in 2022 stood at 10 Lakh units, up 300% from the 3.2 Lakh units registered in 2021. While this momentum is expected to continue in 2023, the initial part of the year could be difficult until the FAME issues are resolved.
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