SMEV Takes Aim at Govt Amid Complaints of Subsidy Misuse

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The government is probing 12 auto manufacturers for alleged misappropriation of subsidies under the Rs 10,000 crore FAME II scheme: Reports

In a major development in the EV sector, the Society of Manufacturers of Electric Vehicles (SMEV) recently hit out at the central government for alleging the misappropriation of subsidies under the FAME India Phase II scheme.

Earlier this week, the Union Minister for Heavy Industries, Mahendra Nath Pandey told the Parliament that the ministry received complaints regarding the misappropriation of subsidies under the FAME India Phase II scheme by some electric vehicle makers. Notably, as per the scheme, electric two-wheeler makers are required to have at least 50 per cent localisation of components to avail of the subsidy.

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Pandey had mentioned that the government received complaints mainly related to violation of Phased Manufacturing Programme (PMP) guidelines and it had been referred to the testing agencies for re-verification. He noted that the models of two OEMs had been suspended from the FAME scheme and processing of their pending claims had been stopped till they submit sufficient evidence to show their compliance with PMP timelines.

SMEV Hits Back

In a response to this, SMEV Secretary General Ajay Sharma said that the allegation is “invalid in the context of the issue at hand.” It is noteworthy that SMEV hit out at the government for holding back incentives under the FAME II scheme.

Sharma stated that due to the impact of COVID-19, the Phased Manufacturing Programme (PMP) guidelines under FAME India Scheme Phase-II were expected to be revised but for various reasons were not modified “in spite of clear indications that these could not be met.”

He added that due to backlog and under-development of the EV ecosystem, ancillary component makers failed to meet the “harsh targets of PMP” both in quality as well as quantity terms.

Notably, original equipment manufacturers (OEMs) were allowed to operate and sell their vehicles and production was verified as per the testing protocols under the scheme, while even giving them extensions in view of the delays in the supply chain.

“These extensions did not do much for the situation because of the underlying COVID impact on the market and production, which the policy and the department failed to address,” said the Secretary-General.

However, he added, OEMs were passing the subsidies to customers from their own funds for more than a year.

Sharma hit back at the misappropriation allegation, saying, “If there is any misappropriation, it is in the Rs 1,100 crore held back by the department that is owed to OEMs in lieu of the above expenditure.”

He further added that the misappropriation was in the policy that had been thrust in the face of the supply chain, which could not respond to the impractical norms. “OEMs do not run the supply chain.”

“If there is any misappropriation”, he continued, “it rests in the hands of customers who have bought these EV scooters and who provided these subsidies on orders of the department.”

As per some recent reports, the government is probing 12 auto manufacturers, including Hero Electric and Okinawa Autotech, for alleged misappropriation of subsidies under the Rs 10,000 crore FAME II scheme.

Benling India Energy and Technology; Okaya EV; Jitendra New EV Tech; Greaves Electric Mobility (formerly Ampere Vehicles Private Limited); Revolt Intellicorp; Kinetic Green Energy & Power Solutions; Avon Cycles; Lohia Auto Industries; Thukral Electric Bikes; and Victory Electric Vehicles International are among the other OEMs against whom complaints have been received.


 

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