FAME probe: Six more EV makers under scanner | The Financial Express

FAME probe: Six more EV makers under scanner

Flouting localisation norms: Blocked subsidy amount for electric two-wheelers crosses Rs 1,000 crore

FAME II scheme, EV makers, electric vehicles, subsidy, Hero Electric, Okinawa Autotech
Electric vehicles (Representative image)

With another half a dozen electric two-wheeler makers being investigated, the government has widened its probe of companies that have wrongfully claimed sops under the FAME II scheme.

In all, the government is now looking into the operations of around 18 companies to determine if the subsidies were rightly claimed. The total amount of subsidy withheld has crossed Rs 1,000 crore, according to persons familiar with the development.

Also Read: FSI alleges anomaly in FAME II subsidy of Rs 368 crore claimed by Ather Energy

In 2022, the government suspended the then market leaders, Hero Electric and Okinawa Autotech, from availing subsidies after they were found to be flouting localisation norms under the scheme.

Sources said the government has now roped in accounting services firm EY for a financial audit of all companies who claimed subsidies under the scheme. India’s premier vehicle testing and validation agencies — ICAT and ARAI — had carried out the initial round of audits pertaining to auto components.

“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,” a senior executive of a company whose subsidies have been stopped, said.

With companies not inclined to continue production without subsidies, production and despatches to dealers nosedived in December and January, manufacturers said. The subsidy ranges from Rs 17,000 to Rs 60,000 per electric two-wheeler.

Also Read: EV makers face scrutiny due to lack of clarity on FAME II subsidy scheme, phased manufacturing programme

“There is pressure on the dealers. Some are exploring an exit, while others are looking to become multi-brand outlets. Funding for inventory from financial institutions has dried up and repayments to them are now late by 180 days,” said an electric two-wheeler dealer seeking anonymity.

Battery makers, whose order books were robust a year back, have reported a sharp dip in fresh orders while production has taken a beating. “Production has come down drastically over the past few weeks. Until there is clarity on subsidy, we do not see any uptick in demand,” said the owner of a battery making company from the north of the country.

Sohinder Gill, director general, SMEV, said a major issue is that companies no longer have adequate working capital to carry on their operations and therefore they are either downsizing or planning to close down.

On January 10, the Parliamentary Standing Committee met with officials of the Society of Manufacturers of Electric Vehicle (SMEV), the apex lobby body of EV makers, officials of some EV companies and officials of the ministry of heavy industries. The committee advised the ministry to resolve the matter of subsidies as soon as possible.

SMEV requested ministry officials to release at least 80% of Rs 1,100 crore of subsidy that it claims has been blocked by the government. It also pleaded for allowing new model approval and updates to existing models, which has not been done in the last six months. Last month, minister of heavy industries Mahendra Nath Pandey said in Parliament that his ministry had received complaints regarding misappropriation of subsidies under FAME II by some electric vehicle manufacturers. The complaints were mainly related to the violation of phased manufacturing programme (PMP) guidelines.

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First published on: 20-01-2023 at 06:00 IST