Govt may bar firms violating Fame-II localization norms

After the ministry of heavy industries sent notices to Hero Electric and Okinawa for alleged violation of FAME II guidelines, both the companies have responded, said another official, also requesting anonymity.

More companies are under the radar for allegedly importing a majority, or all components to assemble EV 2-wheelers locally, but claiming benefits under the scheme, the second official added.

The move violates the localization norms of the Fame-II scheme, which mandates at least 50% local sourcing.

“Investigation is underway. Our policy is that equipment should be manufactured in India. We are moving ahead in line with the ‘Make in India’ concept. It came to our notice that some companies were importing products and selling in India under Fame. Those issues are being probed into and the subsidies have been suspended,” the first official said.

Automotive Research Association of India (ARAI) is investigating the alleged violations.

“If any company is found guilty, we will act strictly as per the norms. We will take strong action against anyone who defers. We will take every step that is required. If they are found guilty we will recover the subsidized amount, and they may be blacklist from Fame-II, as well as other government schemes,” he added.

So far, the Centre has suspended the subsidies to Hero Electric and Okinawa Autotech. Further action on the matter will be taken once the high-level committee completes its probe.

Responding to a query, Okinawa founder and managing director Jeetender Sharma said: “We have been following the Fame-II guidelines and adhered to all guidelines that are notified by the government. We shared all the documentation with testing agencies to their satisfaction. We are meeting 50% DVA criteria, as per government norms. Currently, we are continuing with the subsidies for dealers and customers. At Okinawa, we ensure the highest quality standards are met in all our products and processes.”

Responding to the query from Mint, a Hero Electric spokesperson said: “At Hero Electric we ensure strict adherence to highest quality and safety standards. All our processes and the product portfolio are fully compliant by law, with our product range being CMVR certified and duly registered with the competent authorities. As an industry leader, we have diligently passed on the entire subsidy amount to the customer.”

Queries sent to the ministry of heavy industries remained unanswered till press time.

The government had launched the Fame scheme to support consumers buying EV 2-wheelers, as the prices of the vehicles are higher compared to the traditional vehicles with internal combustible engines (ICE). Fame-II, the second phase of the scheme, started in April 2019, and offers upfront cash discount on the purchase of EVs by customers, for up to 40% of the cost of the vehicle. The subsidy offered is ₹15,000 per kilowatt hour (kWH).

Original equipment manufacturers (OEM) have to claim this discount given to customers from the government by raising bills every month. They benefit through this scheme, as lower showroom prices lead to higher sales.

Following complaints over non-compliance of localization norms, the government also put in place an enhanced vigilance mechanism.

From 1 October, the ministry has put in place a “faceless“ method of capturing phased manufacturing plans and domestic value addition data from OEMs by linking their enterprise resource planning (ERP) software with the government’s application programming interface.

Domestic value addition data will be captured before disbursing incentives under the production-linked incentive scheme for automotives, while phased manufacturing plan data will be captured for Fame-II disbursal.