Govt May Sue 3 Firms For FAME Subsidy Repayment

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The Govt may take legal action against Hero Electric, Okinawa Autotech, and Benling India for failing to repay wrongly obtained FAME subsidies totalling around INR 330 crore. Despite efforts, the Ministry of Heavy Industries hasn’t recovered the funds. The government might involve agencies like the CBI or Enforcement Directorate in a detailed investigation into subsidy misuse. The companies could also face a ban on future subsidies.

According to officials, the Centre may soon file a recovery suit against Hero Electric, Okinawa Autotech, and Benling India for failing to repay the subsidies they wrongfully obtained under the government’s FAME scheme to promote electric mobility. After multiple attempts, the Ministry of Heavy Industries has been unable to recover the disputed amounts from these companies.

The ministry might also seek help from investigative agencies like the CBI or the Enforcement Directorate to thoroughly investigate the misuse of subsidies under the FAME scheme and establish criminal intent. The government aims to recover around INR 155 crore from Hero Electric, INR 125 crore from Okinawa, and INR 50 crore from Benling, increasing daily if the dues are not cleared.

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These three companies are among the top defaulters accused of wrongly claiming subsidies. Other companies, such as Ampere EV, Revolt Motors, Lohia Auto, and AMO Mobility, have settled the issue by refunding the subsidy with penal interest. According to a second official, companies failing to repay the recoverable amounts will also be barred from receiving future subsidies.

In response to queries, Amit Kumar, CEO of Benling India, stated that the company has followed the FAME II scheme guidelines and sold 29,803 electric two-wheelers under the scheme from June 2020 to May 2023 but received subsidy payments for only 19,986 vehicles. He claimed that the government still owes Benling India INR 42.48 crore in subsidies. Hero Electric said it has been in discussions for over 18 months and has proposed solutions for an amicable settlement, asserting compliance with the FAME scheme and stating that the order in question does not apply to them. Okinawa Autotech mentioned that the matter is currently under judice, and they are awaiting further instructions from the high court.

The FAME scheme, launched in 2015 with a budget of INR 895 crore and followed by FAME II in 2019 with an outlay of INR 10,000 crore, aimed to support the sale of domestically made electric vehicles (EVs). However, despite the subsidy disbursements being linked to a phased manufacturing programme (PMP) for increased localisation, companies continued to seek FAME subsidies without adhering to the PMP, undermining the scheme’s intent. Following an initial probe, the government issued recovery notices totalling INR 469 crore to seven companies in the current fiscal year (2023-24).

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Aryaman Raghuvanshi
Aryaman Raghuvanshi
Aryaman Raghuvanshi is a Journalist at EFY. His passion is to explore the future of mobility, which gets him to cover latest technologies shaping the future of automobiles and EVs. But, at times he writes on broader technologies too. LinkedIn: https://www.linkedin.com/in/aryaman-raghuvanshi-2431b7153

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