The Serious Fraud Investigation Office conducted search operations on the offices of EV makers Hero Electric Vehicles Pvt Ltd, Benling India Energy and Technology Pvt Ltd and Okinawa Autotech International Pvt Ltd saying they had fraudulently availed subsidies under the FAME 2 scheme by flouting localization norms.
FAME 2 was the Centre’s EV subsidy scheme, where consumers could buy EVs at subsidized prices and manufacturers could seek the subsidy amount from the government. However, companies can only seek the subsidy amount from the government if they comply with the scheme’s localization norms.
All three companies were found to violate the phased manufacturing programme (PMP) guidelines under FAME 2 to avail subsidies worth ₹297 crore cumulatively, the corporate affairs ministry said.
Guidelines for import
PMP guidelines, which mandate the localization norms for EV makers, list the auto components that may be imported, and the timeline of how these imports will be phased out.
The ministry said SFIO investigations revealed that several restricted parts under the PMP guidelines were either directly or indirectly imported from China.
Emailed queries to Navin Munjal, managing director of Hero Electric, as well as to Okinawa Autotech did not elicit an immediate response. Benling India could not be reached for comment.
This development follows a two-year-long action by the ministry of heavy industries against these companies. In 2022, MHI started taking action against EV makers who were allegedly flouting PMP norms, and demanded a refund of the subsidies they had received.
The ministry investigated 13 companies, and fined six of them, including Hero Electric, Okinawa Autotech, Ampere Vehicles, Benling India, AMO Mobility and Lohia Auto.
Among these six automakers, AMO Mobility, Greaves Electric Mobility and Revolt returned the subsidies with interest within a few months.
However, Hero Electric, Okinawa, and Benling did not refund the subsidy amounts.
In October this year, Hero Electric attempted to settle the dues with MHI, which was considering the company’s request, according to a report by the Economic Times citing government sources.
Third subsidy scheme
The second iteration of FAME, which stands for the Faster Adoption and Manufacturing of Electric (and Hybrid) vehicles, was in operation from 2019 to 2024. The government continued the scheme through the Electric Mobility Promotion Scheme (EMPS) till October this year.
In October, MHI launched the PM E-drive scheme, subsuming the EMPS. This became the third Central government subsidy scheme to promote EV adoption.
PMP guidelines for the PM E-drive scheme have not been announced by MHI yet. Mint earlier reported that senior MHI officials had said the new PMP would have tweaks, compared to past localization programmes.
The SFIO, established in 2015, works under the ministry of corporate affairs to uncover white collar crimes and fraud. To be sure, SFIO does not investigate allegations of fraud or any other criminal charges against an individual.
SFIO completed 23 investigations, including 19 main ones and 10 supplementary cases in FY23, as per its records.