Heavy Industries Ministry Failed FAME II Test, Says SMEV

Mobility Outlook Bureau
27 Apr 2023
07:47 PM
1 Min Read

SMEV also alleged that the Ministry of Heavy Industries (MHI) is trying to paint a rosy picture of electric vehicle adoption in India.

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Reacting to the Ministry of Heavy Industries’ claim of it being close to achieving the target of subsidising a million electric two-wheelers (E2W), the Society of Manufacturers of Electric Vehicles (SMEV) has alleged serious accounting errors on the part of the ministry.

Auditors consulting with SMEV have contended that the figures stated by MHI on achievement of FAME II mandated targets, have “most incongruously and patently disingenuously” included sales of those EVs that were not funded under the scheme. 

Further, SMEV has requested the government and MHI not to count E2Ws in those figures until subsidies are handed over for the same. The total number of E2Ws sold under FAME II scheme between April 2019 and 2023 is listed at 9.6 lakh. Of these, SMEV claims 4.5 lakh vehicles have not been reimbursed the subsidy component to date, “on one account or the other”. 

That means only around five lakh E2Ws have been funded under the FAME II scheme, which is “a clear shortfall in target by half”, stated SMEV in its petition. The association has questioned why the MHI has taken into account sales of E2Ws whose subsidies it has not released?

SMEV has alleged this is being done “to paint a rosy picture of EV adoption in the country”. Notably, subsidies of over 12 OEMs, including Hero Electric and Okinawa, continue to be in suspended state.

OEMs Financing FAME II

Earlier, one of these OEMs, while speaking to Mobility Outlook, had said they were not given a chance to explain their stand on the FAME norms (Story here).

Since MHI did not inform the OEMs of any decision to withhold subsidies for such a long period of time, OEMs continued to sell the vehicles and pass on subsidies. Over INR 1,400 crore worth of subsidies have been passed on by the OEMs to customers over the last 15 months from their own pockets, claimed the association.

Credible sources in the industry Mobility Outlook spoke to said, of the INR 1400 crore, Hero Electric and Okinawa have passed on INR 1,200 crore (INR 600 crore each) of subsidies, while the other EV players combined have passed on the remaining subsidies. 

Earlier in 2023, four more OEMs were hauled up and put in the dock for claiming subsidies for EVs past the threshold of INR 1.5 lakh limit. At present, almost all manufacturers have been declared to be deficient on some count or the other vis-à-vis the FAME policy.

SMEV has said that either the department accepts that it has failed the target by 50%, or it pays up the wrongly withheld subsidies and squares up the account.

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SMEV Recommends Direct Subsidy To Consumer Under FAME

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