FAME electric two-wheeler beneficiary tally cut: Report

The Ministry of Heavy Industries (MHI) has cut the number of beneficiary two-wheelers under scheme from around 989,000 to just under 564,000.

Almost half of electric two-wheelers under the Centre’s Rs 10,000 crore electric vehicle (EV) promotion scheme, FAME II, were sold with false localisation claims, according to a probe cited by an Economic Times report. As a result, the government has cut its official tally of the number of vehicles sold under the scheme, the report said.

Citing an investigation by the Automotive Research Association of India (ARAI), ET reported that several companies were found to be importing essential components such as electric motors, controllers and on-board chargers, claiming them to be locally sourced.

The scheme envisaged subsidising 1 million electric two-wheelers by April 2024. Now, as per the report, the Ministry of Heavy Industries (MHI) has slashed the number of beneficiary two-wheelers under the scheme from around 989,000 to just under 564,000.

To avail subsidies under the Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India Phase-II (FAME-II) scheme, EV makers have to check several boxes, such as localisation of manufacturing parts and caps on retail prices of beneficiary vehicles. However, many of the EV companies allegedly imported several components, claiming they were locally made to get subsidies.

Read | EV makers mull legal options after Centre withholds FAME subsidies: Report

The report named Greaves Electric Mobility, the EV division of publicly traded Greaves Cotton, as one of the businesses that allegedly broke the PMP rules. Following reports that the government had sent the company a letter demanding payment of the money received as subsidies, its stock dropped 10.3 per cent on the BSE on Monday to Rs 133.1.

Meanwhile, a company spokesperson told ET that they are working with the government to better understand "any alleged violations and resolve any compliance concerns in this rapidly evolving industry”.

Since April last year, the government had withheld Rs 1,400 crore in subsidies for more than 400,000 electric two-wheelers purchased through the scheme; but, it continued to count these vehicles in its official tally pending investigation, the report said.

These units are now no longer included in its tally.

Meanwhile, in order to support a greater number of vehicles, the financial allocation for electric two-wheelers has increased to almost Rs 3,500 crore. However, the subsidy per unit has decreased.

Now, as the government reduced the subsidies, the price of electric two-wheelers is likely to increase by Rs 25,000 to 40,000 as of June 1, the report added.