The Indian government is considering legal action against Hero Electric, Okinawa Autotech, and Benling India to recover wrongfully availed subsidies under the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme.

Despite repeated attempts by the Ministry of Heavy Industries to retrieve the disputed amounts, these companies have failed to comply. As the outstanding dues accumulate daily, the government is estimated to recover approximately ₹155 crore from Hero Electric, ₹125 crore from Okinawa, and ₹50 crore from Benling India.

These three companies rank among the highest defaulters, with others like Ampere EV, Revolt Motors, Lohia Auto, and AMO Mobility settling the issue by refunding the subsidies with penal interest. Those failing to repay face disqualification from future subsidies.

Amit Kumar, CEO of Benling India, contends that the company has strictly adhered to FAME II scheme guidelines. Benling India sold 29,803 electric two-wheelers under the scheme but received subsidy payments for only 19,986 vehicles, leaving an uncleared subsidy of ₹42.48 crore with the government.

Hero Electric has been in ongoing discussions for 18 months and is committed to resolving the matter amicably. Okinawa Autotech’s response indicates that the issue is under judicial consideration.

The FAME scheme, launched in 2015 with a ₹895 crore budget, aimed to support the sale of electric vehicles in India. Its successor, FAME II, introduced in 2019 with a ₹10,000 crore outlay, focused on promoting EV manufacturing locally. However, companies failed to comply with the phased manufacturing programme (PMP) while availing themselves of FAME subsidies, defeating the scheme’s purpose.

In the current fiscal year (2023-24), the government has issued recovery notices totalling ₹469 crore to seven companies. Failure to recover the subsidies not only impacts government funds but also undermines the integrity of schemes aimed at fostering sustainable mobility and indigenous manufacturing.

To address this, the government may involve investigative agencies like the Central Bureau of Investigation (CBI) or the Enforcement Directorate for a comprehensive probe into subsidy misuse and potential criminal intent. Legal action underscores the government’s commitment to accountability and transparency in subsidy disbursement, ensuring that public funds are used judiciously to drive India’s electric vehicle transition.

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