FAME II subsidy: SFIO conducts search operations at 3 EV companies over Rs 297 crore subsidy fraud

The Serious Fraud Investigation Office (SFIO) carried out search operations at the premises of Hero Electric Vehicles, Benling India Energy and Technology and Okinawa Autotech International over allegations of fraudulently obtaining subsidies totaling Rs 297 crore under the government’s electric vehicle (EV) incentive scheme. 

According to a release from the Ministry of Corporate Affairs on December 2, the operations resulted in the recovery of evidence, including digital data, books and other materials. The investigation is ongoing. 

The cases stem from the wrongful claims made by the three companies under the Faster Adoption and Manufacturing of Electric Vehicles (FAME) II scheme, which was introduced in 2019 by the Ministry of Heavy Industries (MHI) to promote electric and hybrid vehicles in India. The scheme, along with the Phased Manufacturing Programme (PMP) guidelines, requires certain key vehicle components to be manufactured in India to qualify for subsidies. 

The SFIO’s search operations targeted Hero Electric Vehicles Pvt Ltd, Benling India Energy and Technology Pvt Ltd, and Okinawa Autotech International Pvt Ltd. The three companies are accused of falsely presenting compliance with the MHI guidelines in order to claim subsidies, which were later found to be inaccurate and deceptive. 

The investigation revealed that these companies had violated the PMP guidelines by either directly or indirectly importing restricted parts from China, contrary to the requirements of the scheme. 

The SFIO, which operates under the Ministry of Corporate Affairs, continues its investigation into the matter. 

The government is planning to roll out FAME-III (faster adoption for manufacturing of hybrids and electric vehicles) in the next two months, minister of heavy industries H D Kumaraswamy said in September.

In October, the government, last month extended the EMPS (Electric Mobility Promotion Scheme 2024) by two months till September 20, 2024, with an enhancement of outlay to Rs 778 crore. As the FAME-II subsidy ended in March 31, 2024, the government introduced the EMPS Scheme for a duration of four months from April 1, 2024 to July 31, 2024, with an outlay of Rs 500 crore.

The FAME-I scheme was introduced in 2015 until 2019 with a total outlay of Rs 895 crore. The scheme was extended as FAME-II till March 31, 2024 with an outlay of Rs 10,000 crore.