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After the measure, comes the whip. After trimming the subsidy for electric vehicles, the Centre is now contemplating steps to penalise about half a dozen companies that manufacture electric two-wheelers that were hauled up for claiming subsidies originally designed to encourage the adoption of electric vehicles.

Quoting unnamed senior government officials, The Economic Times has reported that the steps under consideration could include precluding these errant companies from getting the benefit of subsidies in the future. Another measure could be withdrawal of benefits of the FAME-II sops retrospectively on sales recorded over the past 15 months.
The FAME-II (Faster Adoption and Manufacturing of Electric Vehicles) subsidies helped the industry to record impressive sales last year. The incentives were intended for those companies that helped the flourishing of local firms that manufacture parts of the vehicles.

The government has already decided to stop disbursal of Rs 1,400 crore to 13 companies under the FAME II scheme. However, the administration is in the process of disbursing subsidies – about Rs 200 crore – to the companies that were not found guilty of claiming incentives that they were not eligible for.

After the wrongful practices of claiming subsidies were detected, the government dispatched recovery notices to Hero Electric, AMO Mobility, Revolt Motors, Okinawa Autotech, Ampere EV, Lohia Auto and Benling India last month. The total amount that the government sought to recover from these companies amount to Rs 500 crore.

The official quoted by the newspaper also said that the punitive step would be finalised once the recovery takes place.
However, the government does not want to move hastily since further punitive action might affect investments in this emerging sector. A spokesperson of Greaves Electric Mobility that is the company behind Ampere electric vehicles said, “GEM is committed to helping realise India’s ambitions to be a world leader in developing, engineering and manufacturing electric vehicles.” He also said that it was working with the government to understand its concerns and has placed a detailed presentation of its case before the authorities.

“We would like to bring to your notice that AMO Mobility has merely received the subsidy of Rs 0.85 crore and the subsidy amount passed on to the customers so far is approximately Rs 11 crore. We are in discussions with the agency and ministry to settle our matter, though miniscule, and support us from shifting the paradigm from conventional to electric mobility in India,” said a spokesperson of AMO Mobility.

The suspension of payment of subsidies to 13 companies has been effected subject to completion of inquiry by Automotive Research of India and International Centre for Automotive Technology. These two are testing bodies that are checking whether the companies prima facie found guilty did violate local sourcing conditions by incorporating parts in their vehicles. Apparently, these components were imported from China.
About 10.5 lakh claims of subsidy have reached the government under the FAME II subsidies. But the ministry of heavy industries did not approve about 4 lakh claims.