FSI alleges anomaly in FAME II subsidy of Rs 368 crore claimed by Ather Energy | The Financial Express

Are EV makers cutting corners to access FAME subsidy?

The FAME scheme was introduced by the government to encourage users to adopt electric vehicles by providing subsidy to the tune of Rs 20,000 for a two-wheelers price of Rs 1.5 lakh (max price ex-factory).

EV charge

The FAME (Faster Adoption and Manufacturing of Electric (& Hybrid) Vehicles) scheme was introduced by the government of India to promote and drive the electric vehicle industry in the country. In fact, the scheme with a robust outlay of Rs 10,000 crore bet on the two- and three-wheeler segments to be the flag bearers of the scheme.

But, with any new policy or scheme, there were certain grey areas and shortcomings that impacted the potential uptick and the potential. For starters, the sales of electric vehicles were abysmally low, which resulted in a handful of players competing in the market, with the majority of sales, especially in the two- and three-wheeler segment coming for low-speed products or the lack of supply chain ecosystem to meet the domestic demand.

The government realising the situation mandated domestic value-addition and sourcing for EV makers to avail the FAME scheme benefits. In between came the unprecedented Covid-19 situation, which disrupted the plans for many genuine EV players and also created turmoil for the industry.

At present, there are more than 12 EV makers who have seen their subsidies being stopped and are being investigated by the Ministry of Heavy Industry (MHI) for violating the conditions to be eligible for the FAME subsidies.

In a letter written by the Federation of Small Investors (FSI) to Dr Hanif Qureshi, Joint Secretary, Ministry of Heavy Industries, it is alleged that Bengaluru-based Ather Energy has fraudulently “managed to bypass the subsidy eligibility limit of Rs 1.5 lakh set by DHI by stealthy separating the ‘EV Charger’ and the ‘Intrinsic Essential Software’ that are integral parts of the vehicle and vehicle cannot run without them” to claim the FAME subsidy. Financial Express has not been able to independently verify the allegation and has reached out to FSI to get more clarity and information.

Subsidies and claim

The FAME scheme was introduced by the government to encourage users to adopt electric vehicles by providing subsidy to the tune of Rs 15,000 per kWh for 2 wheelers upto 40% price (max price ex-factory Rs 1.5 lakh); Rs 50,000 for a three-wheeler (max factory price Rs 5 lakh); four-wheeler Rs 1.5 lakh (max ex-factory price Rs 15 lakh) and e-bus upto Rs 50 lakh (max ex-factory price of Rs 2 crore). The total budget outlay was Rs 8,596 crore.

The Federation alleges that Ather Energy sold 70,769 e-two-wheelers between 2019 to December 27, 2022 and claimed a total subsidy of around Rs 368 crore. The allegation states that for an electric two-wheeler to be eligible for FAME II subsidy the ex-factory price should be no more than Rs 1.5 lakh. In the case of Ather Energy, the cost of an e-scooter starts at Rs 173,245 (ex-showroom Coimbatore) for the Ather 450+. The charger is sold separately for Rs 19,975.

It is important to note that most electric two-wheelers sold in the country come along with a charger bundled standard with an e-scooter. This has not been the case for Ather Energy. Furthermore, the price of the Ather 450X, comes with an optional performance upgrade software for which a customer has to pay Rs 23,010 (ex-showroom Coimbatore) thus taking the price of the e-scooter over and the above maximum cap in price set by the FAME II scheme.

While the credibility of FSI remains a question, the price breakup for the Ather e-scooter could be debatable.

When Financial Express reached out to Ather Energy it declined to comment.

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First published on: 17-01-2023 at 14:55 IST