Second round of probe finds four more firms in FAME-II scheme violations

The central government in its second round of investigation into the alleged violation of Phased Manufacturing Programme (PMP) guidelines under the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME-II) scheme has found four more original equipment manufacturers (OEM) not conforming to the norms.

The Automotive Research Association of India (ARAI) has found Greaves Electric Mobility (formerly Ampere Vehicles), Benling India Energy and Technology, Revolt Intellicorp, and AMO Mobility allegedly violating the localisation norms, government officials told Business Standard. ARAI, a statutory body under the Ministry of Heavy Industry (MHI), is handling the probe into the allegations of EV makers flouting the local equipment usage norms.

“We have received the final report from the testing agency. The defaulting firms will face the action similar to Hero Electric and Okinawa Autotech,” senior officials said, adding, “Notices will be sent to the defaulting companies in a week.”

Queries sent to the four aforementioned companies remained answered until the time of going to press.

The MHI in its first round of investigation issued recovery notices for a total of Rs 249 crore to Hero Electric and Okinawa Autotech (Okinawa). Both companies were also “deregistered” from the FAME-II scheme.

The second round of the investigation, according to sources, did not find a violation on the part of Victory Electric Vehicles International and Jitendra New Ev Tech. The ministry gave a clean chit to Kinetic Green and Okaya last month.

“So far, of the 13 OEMs under PMP investigation, six are found to have violated the norms. Four have not violated any guideline and the investigation report in the case of three players is still pending,” an official said.

The three OEMs on which the final report is still awaited are Lohia Auto Industries, Thukral Electric Bikes, and Avon Cycles.

The government halted subsidies to many companies in September after receiving complaints, mainly related to violations of the Phased Manufacturing Programme guidelines. These had been referred to the International Centre for Automotive Technology and the Automotive Research Association of India testing agencies for re-verification.

Okinawa Scooters and Hero Electric were on the first list of OEMs to have their subsidies arrested in September last year. The EV industry has since been seeking reimbursement of unpaid subsidies which, according to the Society of Manufacturers of Electric Vehicles (SMEV), stand at more than Rs 1,200 crore.

To be eligible for FAME-II subsidies, EV original equipment manufacturers (OEMs) must demonstrate that at least 50 per cent of components in their vehicles are manufactured in India and locally sourced. According to the norms, subsidies given to E2W makers are also linked to their adherence to a maximum ex-factory price of Rs 1.5 lakh.

Business Standard earlier in February that four OEMs -- Ola Electric, Ather Energy, TVS, and Hero MotoCorp’s Vida -- were being investigated for alleged ex-factory price violations. The government recently concluded its investigation into ex-factory price violations and the four OEMs have agreed to pay Rs 287 crore.

The government provides an incentive of Rs 15,000 per kWh on electric two-wheelers, capped at 40 per cent of the total vehicle cost, provided they meet specified localisation criteria. The subsidy for EV makers ranges between Rs 17,000 and Rs 66,000 per electric two-wheeler.

However, from June 1, 2023, the Centre has slashed the subsidy for electric two-wheelers to Rs 10,000 per Kwh. The existing maximum subsidy cap has also been brought down to 15 per cent. The proposed increase in the scheme outlay and a reduction in subsidy per vehicle may enable longer government support for the e-2W segment.