Recent FAME II Penalties Forcing Several EV Manufacturers To File For Bankruptcy?

CalenderPublished at July 26, 2023 by BikeJunction
Recent FAME II Penalties Forcing Several EV Manufacturers To File For Bankruptcy?

Post the recent implementation of FAME II penalties, multiple EV manufacturers may be forced to file for bankruptcy. The Ministry of Heavy Industries has investigated and found 7 manufacturers guilty of failing to adhere to the set manufacturing norms. 

Amongst the 7 guilty manufacturers, 3 of them- Hero Electric, Amo Mobility & Benling Motors, have filed a request to the PM to resolve the said issue. In the letter reviewed closely by media houses - manufacturers have expressed their concerns about the absence of fair reasoning behind the decision.  

The companies have been fined penalty fees of Rs 500 crore against the charge of violating the Phased Manufacturing Programme (PMP) norms. The norms clearly state that 50% of the manufacturing has to be through locally sourced components. The deadline to pay the penalty is the end of this week. 

The note to the PM included, “It is in the interest of the component makers, investors, and other ecosystem providers who have made substantial investments of over Rs 3,000 crore, that the government develop a settlement mechanism to pay the Rs 1,500 crore that the government owes to the industry players and Rs 500 crore that the industry must pay for policy violations.”

As per the letter, MHI’s rejection to reinstate its accreditation to the NAB (National Automotive Board) website. It has been blocked, which has significantly blocked the OEMs from applying for the FAME II subsidy. 

The MHI investigation further discovered that these OEMs had priced their scooters much higher in order to claim the subsidies by billing integral parts separately. Mahendra Nath Pandey, the Union Minister of Heavy Industries, told the press that the FAME benefits the auto industry because of the government’s pro-industry policies. However, SMEVs has raised the question as to why Ola, Ather & TVS’s NAB access were not blocked, despite finding that these companies have been guilty of the same.

"Is overcharging a customer a lesser crime than passing on a subsidy to the customer?" Kaul inquires. "The government cleared the legacy manufacturers and even though the incumbents established that the OEMs did not receive the subsidies, they will continue to prohibit the ones who have passed, and continue to pass on subsidies, which is unfair."

The government has issued a Rs 500 Crore penalty for each manufacturer that has been found guilty -

  • Hero Electric 
  • Okinawa Autotech
  • Greaves Electric Mobility
  • Benling India Energy
  • Revolt Intellicorp 
  • AMO Mobility

Before you go, don’t forget to read about the FAME II state subsidies before you buy an electric vehicle

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