Government considers legal action against three firms for FAME subsidy recovery

  • Industry News
  • Mar 20,24
The move comes after the ministry of heavy industries failed to recover the disputed amount from these companies even after multiple attempts
Government considers legal action against three firms for FAME subsidy recovery

The Centre could soon slap a recovery suit against Hero Electric, Okinawa Autotech and Benling India as the three have not paid back the subsidy they wrongfully availed under the government's flagship scheme to promote electric mobility, officials said.

The move comes after the ministry of heavy industries failed to recover the disputed amount from these companies even after multiple attempts.

The ministry could also seek the assistance of an investigative agency, like the Central Bureau of Investigation (CBI) or the Enforcement Directorate, for an in depth probe into pilferage of subsidy given under the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme and for establishing criminal intent, they said.

According to the ministry's estimates, the government is to recover around Rs 155 crore from Hero Electric, Rs 125 crore from Okinawa and Rs 50 crore from Benling, one of the officials said, adding that the amount increases with each passing day if the company does not clear the dues.

The three are among the highest defaulters from the list of companies that were alleged to have wrongly claimed subsidy amount.

Besides the three, the government had issued recovery notices to Ampere EV, Revolt Motors, Lohia Auto and AMO Mobility, all of whom have settled the issue by refunding the subsidy with penal interest, officials said. "Companies that do not payback the recoverable amounts are also barred from receiving subsidies in future," a second official said. In response to queries from ET, Amit Kumar, CEO at Benling India, said "Benling India maintains that it has diligently adhered to the guidelines and requirements set forth by the FAME II scheme".

According to Kumar, Benling India sold 29,803 electric two-wheelers from June 2020 to May 2023 under the FAME II scheme. But the company received subsidy payments for just 19,986 vehicles. "The uncleared subsidy amount of Rs 42.48 crore is lying with the government," he said.

Hero Electric said they have been actively engaged in discussions regarding this matter for over 18 months now. "Our stance is publicly available, and we remain committed to resolving this issue. We have proposed various solutions for an amicable settlement already," the company told ET. "On the matter of non-compliance, we have already provided the MHI (ministry of heavy industries) with necessary information demonstrating our complete compliance with FAME and that the order in question does not apply to us at all."

Okinawa Autotech said "The matter is currently sub judice and we await further instructions from the honourable high court."

The government launched the first FAME scheme in 2015 with a budget of Rs 895 crore. FAME II was rolled out in 2019 with an outlay Rs 10,000 crore.

The scheme was aimed at supporting the sale of electric vehicles (EV) made in the country. Subsidy disbursals in the programme were linked to a phased manufacturing programme (PMP), which ensured higher localisation as years passed. While companies did not adhere to the PMP, they continued seeking FAME subsidy, defeating the intent of the scheme.

The government after an initial probe sent out recovery notices in the current fiscal (2023-24) totalling Rs 469 crore to seven companies.

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