After stopping FAME-2 subsidy to electric two-wheeler (E2W) companies for almost one year due to allegations of breach in guidelines, the government has issued show-cause notices to several leading firms, including TVS, Hero Motocorp, Ola Electric and Ather Energy, said sources close to the development.
The notices have been issued asking why action should not be taken for their alleged involvement in price manipulation and failure to adhere to the guidelines over localisation of components leading to flouting of norms under the Phased Manufacturing Programme (PMP). The notices were issued 10 days ago and company representatives have held dialogues with government officials to explain their stand.
There are around 50 E2W companies/brands in India and around 20-21 are certified to get subsidies under the FAME-2 scheme. And subsidies have been halted for 16-18 companies currently.
Sources said that other companies might also be issued show-cause notices in the future.
When contacted, Ather Energy did not comment. Mails sent to TVS Motor Company, Hero MotoCorp and Ola Electric remained unanswered at the time of going to press. These four companies control 40-45% of the domestic E2W market.
The names of the four premier EV companies were mentioned by an alleged whistle-blower in a mail sent in February to Hanif Qureshi, joint secretary, heavy industries ministry.
“The show-cause notice has been issued to almost everybody. We will get it shortly too. Executives from various companies such as Ola Electric, Ather Energy and TVS, who never spoke before about the issue with us, have now started to discuss ways to tackle this issue,” a top executive of an EV startup said to FE.
As per the operational guidelines of FAME 2, the cap limit for the ex-factory price of electric two-wheeler is set at ₹150,000. As per the PMP guidelines, the bill of materials and also as per the CMVR (central motor vehicle rules) certifications, the portable charger and any intrinsic software are essential parts of the vehicle.
It is alleged that Ather Energy billed the intrinsic software as an upgrade and sold the charger separately and not as a package along with the vehicle.
According to the Society of Manufacturers of Electric Vehicles (SMEV), the electric two-wheeler segment saw sales of 726,976 high-speed (speed>25km/hr) two-wheelers in FY23.
However, E2W adoption fell month-on-month over the targets, ending with an annual shortfall of more than 25% over the minimum target set by Niti Aayog and various research organisations, said SMEV in a release.
As much as ₹400 crore of original equipment makers operating in the premium end was “stuck due to the allegation of under-invoicing to bypass the FAME norms leading to crippling of their business operations due to extreme shortage of working capital”, SMEV said.
It claimed that as many as 16 companies that represent more than 95% of the industry are waiting for some resolution for the chaos in the FAME PMP to enable them to plan their businesses in FY24.
