FAME investigation paves way for indigenous EVs, fair competition: OEMs

Disbursement of halted claims will help drive sales in the festive season

Leading electric vehicle (EV) manufacturers are hopeful that the crackdown on companies by the Ministry of Heavy Industries for violating the Phased Manufacturing Programme (PMP) guidelines under the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME II) scheme will help further the indigenisation of the industry and lead to widespread adoption of EVs in the country.

A majority of automotive (auto) manufacturers say that the clampdown on original equipment manufacturers (OEMs) selling Chinese products by mis-labelling them as Indian has created a level playing field for indigenous players.

OEMs with deep pockets were gaming the system by cataloguing their Chinese imports as home-grown to take advantage of government incentives meant for locally manufactured EVs.

The investigation has instilled faith in players who were adhering to high-quality domestic products, observe auto manufacturers.

“The FAME II scheme aimed at creating an EV ecosystem in the country. Instead of bringing investment, employment, and technology, some OEMs focused on buying cheap raw materials from China. The crackdown has led to a more self-reliant and indigenised EV market,” says Sanjay Popli, chairman, Victory Electric.

Victory Electric was one of the 13 OEMs under the ministry’s PMP violation probe. The Bahadurgarh-headquartered firm was given a clean chit by the ministry last month.

Not just Victory Electric, but five others — Okaya EV, Kinetic Green, Jitendra New EV Tech, Thukral Electric Bikes, and Avon Cycles — have also received certificates of exoneration from the government.

Although the government has absolved those found not in breach of norms, it has sent recovery notices adding up to Rs 469 crore to those found using imported parts. A total of seven firms — Hero Electric, Okinawa Autotech, Ampere EV by Greaves, Benling India Energy and Technology, Revolt Motors, AMO Mobility Solutions, and Lohia Auto — have been sent such notices.

Although Revolt has agreed to repay the Rs 44 crore it had claimed under the scheme, others like Hero Electric and Benling India questioned the government’s testing mechanism.

“The investigations were conducted in an ad hoc and unscientific manner, and their reliability might be compromised due to data being obtained from a stolen source,” says a spokesperson for Hero Electric.

Benling India echoes Hero Electric’s statement, saying, “Investigation has been carried out without technical basis.”

Although Hero Electric and Benling India question the investigation procedure, all those who have received a clean chit say the investigation was thorough and based on documents submitted by them.

“Investigation was done in our presence. The International Centre for Automotive Technology (ICAT) brought vehicles from our existing customers and did a strip-down test. Each product was selected randomly and checked with the invoices we provided,” says Jitender Thukral, co-founder, Thukral Electric Bikes.

Rajesh Sabharwal, general manager of e-bike sales, Avon Cycles, resonates with Thukral’s words, saying, “ICAT not only checked our invoice but also contacted our customers for their reviews. Those who have done nothing wrong have been given a clean chit.”

Claim to FAME

Amidst ongoing investigations, some key EV manufacturers have voiced optimism, believing that the stringent actions taken by the ministry will create a level playing field in the industry.

“Unethical practices not only compromise fair competition but also hinder the growth of genuinely indigenous EV manufacturers. The ministry’s actions should have come much earlier,” says Popli, adding, “The investigation has allowed us to compete fairly and further strengthen our commitment to quality indigenous EVs.”

The EV industry in the country, which had witnessed significant growth in recent years, faced a setback against the backdrop of FAME investigations.

Apart from a PMP breach, the government also ordered Ola Electric, Ather Energy, TVS Motor Company, and Hero MotoCorp’s Vida to repay Rs 288 crore to customers, which they had charged for ‘offboard chargers’.

Industry players say that the government’s proactive stance and firm action against non-compliant companies are expected to send a strong message to the industry, encouraging other manufacturers to invest in research and development, and the domestic production of EVs.

With the revival of sales in July, auto manufacturers are also hopeful that recovery is now in sight.

Overall electric two-wheeler sales more than doubled in the first half of July to 26,401 units, from 12,519 units sold during the same period in June.

Industry players also feel that with the government releasing the halted subsidy of firms under probe and its plans to introduce the third phase of FAME, the domestic EV sector will witness a paradigm shift with an increased focus on innovation, quality, and fair competition.

“A constructive dialogue has already begun for a potential review and extension of the demand incentive scheme in the form of FAME III, which will give the domestic EV industry a push. Halted claim disbursement will also help boost sales during the festival months,” says Sulajja Firodia Motwani, founder and chief executive officer, Kinetic Green.