fame: EV companies to return FAME II sops or face legal action after Centre cracks the whip

The Centre will take legal action against electric vehicle (EV) makers that don’t refund incentives said to have been wrongfully claimed under the Faster Adoption and Manufacturing of Electric Vehicles (FAME) II scheme, a government official said. They will also be restricted from participating in the programme’s updated version, the person said.

The government earmarked ₹10,000 crore to accelerate the shift to EVs under FAME in five years to March 2024. The corpus and structure of the third leg of the incentive scheme is being worked out.

“Companies that claimed incentives wrongfully under FAME II have to first pay (it) back,” said a second official. “Only after that will we consider whether (to) release stalled subsidies to them or allow them to participate in the scheme.”

The ministry of heavy industries stalled disbursal of subsidies last fiscal after receiving anonymous emails alleging that several firms were claiming subsidies without meeting Phased Manufacturing Plan (PMP) norms meant to increase indigenisation, investments and employment in the country.

Rattan Enterprises-owned Revolt Intellicorp and Amo Mobility have agreed to return the amounts claimed, said officials aware of the development. Of the rest, some have declined to furnish critical information related to their local supply base citing limitations under non-disclosure agreements (NDAs).

Companies seeking relief on payments
The information has to be provided under FAME II when asked for.

“To ensure mass adoption, we have passed on the subsidy of Rs 11 crore… despite receiving only Rs 85 lakh so far,” Amo said in a response to queries. “We are looking forward to finding an amicable and constructive solution on this matter.”

The government sent recovery notices totalling ₹469 crore earlier this fiscal to seven companies – Hero Electric, Okinawa Autotech, Ampere EV, Revolt Motors, Benling India, Lohia Auto and Amo Mobility – for allegedly violating local sourcing norms.

These companies were barred from submitting claims under FAME II in October last year, pending investigation, but continued to sell vehicles at incentivised rates to end customers.

Hero Electric, Okinawa Autotech, Ampere, Revolt Intellicorp, Benling India and Lohia Auto didn’t respond to queries.

Benling India is said to have asked that the amount due be deducted from future payable subsidies. Hero Electric has declined to share documents about vendors citing restrictions under NDAs, the second government official said.

The companies have been asking the government for relief on payments. The second government official said this would hamper their prospects. “Players that do not clear their FAME II dues will not be allowed to participate in the FAME III scheme,” he said.

The ministry identified 18 parameters for meeting localisation norms under FAME II. Investigations have revealed that of the 26 companies registered under FAME II, seven did not comply with norms and yet submitted documents to claim incentives.

The ministry is in the process of releasing subsidies to all companies that have received a clean chit in investigations carried out by testing agencies Automotive Research Association and India and International Centre for Automotive Technology.

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