The Centre has requested a sum of Rs. 469 crore from seven Electric Two-wheeler Manufacturers for allegedly claiming incentives without complying with the Faster Adoption and Manufacturing of Electric Vehicles (FAME) II scheme regulation.
Seven companies allegedly got blamed for misappropriating subsidies from the scheme by assembling vehicles in the country with imported products. Ampere EV, Amo Mobility, Benling India, Hero Electric, Lohia Auto, Revolt Motors, and Okinawa Autotech were those companies.
Facing criticism last month, the group of- seven electric 2-wheeler manufacturers asked the government to explore the possibility of requiring customers to repay excess rebates they had availed of when buying the vehicles.
OEM letter to the Ministry of Heavy Industries
According to a letter sent to the Ministry of Heavy Industries, the Society of Manufacturers of Electric Vehicles said customers who have availed of such subsidies may be required to return them to the OEMs.
The Society of Manufacturers of Electric Vehicles (SMEV) suggested the recovery amount should come from customers who received excess rebates from some original equipment manufacturers under the FAME-II scheme.
This request occurs during a tense time when negotiations between the government and the manufacturers of electric two-wheelers have been at a standstill for the past 18 months over the payment issues under the FAME-II subsidy.
Sanjay Kaul from SMEV said that since your department gave a penalty to some original equipment manufacturers (OEMs) for charging too much to customers a couple of months ago and asking them to pay back the money, you should do the same to the second group of non-complying OEMs and get the money back from them and give it to the department.
Even if the correction was retrospective, the buyer is still responsible for returning discounts they obtained more than the proper price.
SMEV engaged Sanjay Kaul as Chief Evangelist to represent them. Kaul is a former BJP spokesperson who will assist with improving the group’s agenda.
The MHI suggests that the subsidies transferred to consumers by OEMs now stand canceled because of technical issues decided by the MHI Department after the fact. The letter stated that end-users who have taken such subsidies should return these to OEMs in all fairness.
Kaul says that OEMs are open to providing the government with consumer data or “launching a public campaign to encourage customers to return any excess rebates that they received as subsidies, under the oversight of the Ministry.”
Kaul said it could be appropriate for the OEMs to call a meeting with MHI representatives to work out the specifics.
Investigation by MHI
A probe conducted by the heavy industries ministry revealed that these enterprises took advantage of the scheme’s fiscal benefits while breaching the rules.
According to the scheme’s guidelines, incentives were allowed to create electric vehicles utilizing made-in-India components; however, the examination revealed that these seven enterprises reportedly used imported parts.
The investigation was launched when MHI received anonymous letters stating that some EV manufacturers claimed subsidies. They failed to follow the Phased Manufacturing Plan (PMP) standards intended to stimulate local manufacturing of these electric vehicles.
The news comes months after the government launched an inquiry into TVS Motors, Hero MotoCorp, Ola Electric, and Ather Energy for overcharging customers, infringement of the FAME II subsidy scheme, and delayed more than 1,200 crores in funds in connection with the same.
After the government blamed OEMs for under-invoicing to get around the FAME-II regulations, an extra 400 crore got frozen for OEMs in the luxury end. Before the FAME-II subsidy can resume, the four OEMs must return the money.
All four companies—Ola Electric, Ather Energy, Hero MotoCorp, and TVS Motor—have agreed to reimburse customers for the expenses of EV chargers. The Center had previously prohibited paying incentives to EV manufacturers under the FAME II program for customers to pay for the EV charging equipment included with their electric scooters.
Request to Niti Aayog
The EV lobby notified the government’s think tank Niti Aayog last month that numerous OEMs and startups had closed their doors because of the government’s decision to withhold the FAME-II subsidy. The association pleaded with Niti-Aayog to reconsider the present fate of the FAME-II policy.
The FAME “subsidy blocks” have severely hurt OEMs, and the EV lobby has also suggested to the finance ministry the establishment of a 3,000 crore rehabilitation fund to help them recover and continue operating.
Significantly, the government dropped the incentive for electric two-wheelers under the FAME-II scheme from 15,000 to 10,000 rupees per kWh in May.
According to the announcement, the maximum incentive for electric two-wheelers will now be 15% of the vehicles’ ex-factory pricing, down from the previous 40%.