Hero Electric refutes charges related to FAME II subsidy misuse, says matter a 'difference of opinion'

Following the Ministry of Heavy Industries’ (MHI) notice asking the electric two-wheeler maker Hero Electric to show supporting documents on whether the components used in their Electric Vehicles (EVs) are primarily locally sourced, Hero Electric said that it is “fully complaint” by the law.

“The issue pertaining to the FAME-II (Faster Adoption and Manufacturing of Electric and Hybrid Vehicles) subsidy is a difference of opinion pertaining to interpretation of laws between the authorities and industry, which is a common occurrence. At Hero Electric we ensure strict adherence to highest quality & 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,” a Hero Electric spokesperson told Business Today.

The recent audit has EV makers Hero Electric under scrutiny for not having sufficient proof to justify the claims related to localisation of its parts and their FAME-II subsidies have been temporarily suspended. According to the notice issued by the Government of India, it will not be available to EV manufacturers until the supporting documents are shared. The Micromax co-founder Rahul Sharma’s Revolt Motors, Coimbatore-based EV manufacturer, Ampere Vehicle and Gurgaon-headquartered Okinawa have also received similar notices.

Care Ratings, in its recent report, said that the exclusion of the company’s products from FAME eligibility and/or any prolonged delay in the receipt of subsidy claims might have an unfavourable impact on Hero Electric’s profile.

“As an industry leader, we have diligently passed on the entire subsidy amount to the customer. In such instances the common practice is to hold discussions with the relevant authorities to arrive at a resolution, and these talks are already underway,” the spokesperson said.

Jeetender Sharma, Founder and MD, Okinawa Autotech, talking to BT on the FAME II subsidy issue said, "We have been following the FAME-II guidelines and adhere to all the guidelines that are notified by the government. We have shared all the documentation with the testing agencies to their satisfaction. We are meeting 50 per cent DVA criteria as per the government norms. Currently, we are continuing the subsidy for dealers and customers. At Okinawa, we ensure that the highest quality standards are met in all our products & processes."

The FAME II subsidy is provided by the central government on the condition that more than 50 per cent of the EV components are locally-made. The companies are under scanner for allegedly importing majority of components but are claiming benefits under the scheme. The ministry is suspending subsidies for companies following reports that some companies were importing products and selling in India, thus, misusing the subsidy benefits. If any EV maker is found making fake localisation claims, they will be fined heavily as well as their subsidies will be cancelled. For the end-consumer, this means that prices of electric two-wheelers might go up which in turn could affect their sales.

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