Hero Electric denies receiving ministry letter for subsidy recovery

Hero Electric has denied receiving a letter from the Ministry of Heavy Industries (MHI) about a "wrongfully claimed subsidy" for electric two-wheeler (E2W) manufacturing.

“...we would be happy to respond to it if and when we get it as it would hopefully open the doors for dialogue and resolution rather than the stalemate for the last fifteen months,” said Sohinder Gill, chief executive officer of Hero Electric, in a statement on Sunday.  

“This could be the first step to help us to recover the Rs 500 crore held up with the Department (MHI) as unpaid subsidy quickly,” Gill said.

"We are confident that, unlike the previous executives that had blocked all our attempts to find any resolution, the current officials will work towards a practical resolution based on the situation on the ground and quickly reimburse the locked subsidy that has crippled our business operations," Gill said.

'Business Standard' reported last week that the MHI has initiated a process of reversing around Rs 250 crore claimed under the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME-II) scheme by Hero Electric and Okinawa Autotech.

Gill said Hero Electric has followed the entire central motor vehicle rules (CMVR) and certification process for manufacturing and selling its entire range of E-bikes for the last 15 years.

The lack of localisation on the company’s part is due to logistics. “Localization to the value of 50 per cent is a guiding light, designed to nudge local entrepreneurs and industry towards a Make in India mindset. However, a shortfall of 5 per cent or 7 per cent or 10 per cent  in the final product should not be read as a willful default, but a logistical crunch,” Gill said.

Gill said market leaders manufacturing in big volumes in the year 2019-21 were the worst affected because of a supply chain crisis that became worse during Covid-19 in 2020 and 2021.

Gill said late entrants in the EV space, such as Ola Electric, Bajaj, TVS, Kinetic, and Okaya, benefited when the supply chain started taking off in small numbers.

“The issue that needs to be resolved is therefore pertaining to the two to three years beginning 2019 that had no supply chain and also suffered a Covid blackout period from whatever small-scale Indian component was trying to do.”

Hero Electric alleged there are attempts to "derail their business by exaggerating, sensationalizing, and maligning the brand."

“A syndicated attack that has been going on for the last 15 months to shake our market leadership of close to a decade,” it said.