Centre to recover subsidies wrongly claimed under Fame scheme: Report

New Delhi, January 6, 2023 

Ministry of Heavy Industries has already initiated the process to find out the quantum of subsidy claimed without meeting the localisation commitments by EV makers in India

The Centre is planning to recover the subsidies wrongly claimed by electric vehicle (EV) makers in India, a report in the Economic Times (ET) said. The subsidies were availed of under the Rs 10,000 crore Faster Adoption and Manufacturing of EVs in India (Fame) scheme created by the Centre for promoting local manufacturing and adoption of transport that does not have tailpipe emissions.

"EV manufacturers had committed to the government that they would gradually increase the quantum of localisation in the vehicles they sell in the country," a senior official told ET. The Ministry of Heavy Industries (MHI) has already initiated the process to find out the quantum of subsidy claimed without meeting the localisation commitments.

Under Fame, the EV makers can provide a discount of up to 40 per cent on the cost of a vehicle to the customer. That discount can then be claimed as a subsidy. In December, heavy industries minister Mahendra Nath Pandey told the Lok Sabha that the ministry had received complaints that some companies were not following rules.

"The complaints were mainly related to the violation of Phased Manufacturing Programme (PMP) guidelines under FAME India Scheme Phase-II," he said in response to a question.

The official cited above said that the government would recover the wrongly claimed subsidy.

Fame-II was started on April 1, 2019. The sale of EVs under the scheme has jumped manifold throughout the years, the report said. As of December 9, 2022, a total of 443,000 EVs were sold in India in FY23.

In 2022, after the allegations of misuse by the companies came to light, MHI stopped subsidies to the companies that were in question.

[The Business Standard]