FAME electric two-wheeler beneficiary tally slashed

Mumbai: Nearly every second electric two-wheeler sold under the Centre’s ambitious ₹10,000-crore electric vehicle promotion scheme was based on false localisation claims, an investigation has found, said people with knowledge of the matter. This has prompted the government to slash its official sales tally, they said.

The ministry of heavy industries has cut the number of FAME-II beneficiary two-wheelers from some 989,000 to just under 564,000.

Cos Gave False Info: Probe
The Faster Adoption and Manufacturing of Electric (and hybrid) vehicles in India phase-II (FAME-II) scheme envisaged subsidising 1 million electric two-wheelers by April 2024. A probe conducted by the Automotive Research Association of India (ARAI) found multiple companies relying on imports for key parts such as electric motors, controllers and onboard chargers, said the people cited above. These companies provided incorrect information on the locally sourced content of their vehicles, they said.

FAME-II subsidies came with the condition that applicant companies adhere to a phased manufacturing plan (PMP) that prescribed a gradual increase in the local sourcing of parts. This was to ensure that taxpayer funds were being used to promote local manufacturing and not subsidising Chinese imports.

One of the companies reportedly not following the PMP guidelines was Greaves Electric Mobility, the electric vehicle (EV) arm of listed company Greaves Cotton. The stock fell 10.3% on the BSE on Monday to ₹133.1 following reports of the government sending the company a notice to recover the money paid as subsidies.

“We are working with the government to better understand any alleged violations and resolve any compliance concerns in this rapidly evolving industry,” a company spokesperson said in response to ET’s queries. “Greaves Electric Mobility is committed to helping realise India’s ambitions to be a world leader in developing, engineering and manufacturing electric vehicles.”Official Numbers
The government had withheld subsidies to the tune of Rs 1,400 crore for over 400,000 electric two-wheelers sold under the scheme since April last year, but continued adding these units to its official tally pending investigation. Now, it has removed these units from its tally.

The ministry and ARAI did not respond to ET’s queries.

The move comes after a lobby group representing the EV industry wrote to a parliamentary standing committee that the government was “trying to cover up” the shortfall in achieving its targets by including the units for which subsidies were withheld also in its official tally, said people in the know.