Start-up EV makers allege partial treatment, halt of FAME subsidies

Start-ups manufacturing electric two- and three-wheelers have alleged they are not getting subsidies under the second phase of the Faster Adoption and Manufacturing of Electric Vehicles (FAME II) scheme even though some established, large manufacturers are receiving them.

Subsidies of Rs 200-300 crore remain unpaid, said executives of various start-ups.

Players like TVS Motor Co, Bajaj Auto, Ola Electric, and Mahindra Electric continue to enjoy benefits, they said.

Sources at these firms said they had been getting reimbursements without delay.

To get FAME-II benefits, manufacturers must do 50 per cent of value addition locally. A government audit at a few e-two-wheeler companies is underway for alleged non-compliance with localisation norms under FAME II.

For some like Hero Electric, Okinawa Auto Tech, Ampere Electric and Rattan India’s Revolt, non-payment is related allegedly to this.

The founder of an electric two-wheeler start-up said: “We don’t understand this differentiated treatment. The worst part is, all this is being done without even an audit.”

Uday Narang, founder and chief executive officer (CEO), Omega Seiki Mobility, said “the non-payment of subsidy has led to serious cash flow issues”.

Omega Seiki Mobility had plans to double its capacity from 500 units a month to 1,000 units but has now deferred the expansion. “I don’t know how long this will continue,” said Narang.

Amitabh Saran, founder and CEO at Altigreen Propulsion Labs, too said his firm had not received the subsidy.

“We received FAME-II subsidies until the end of July. That said there have been changes in process / paperwork expectation at the ministry. The industry has protested their nature and timing. I understand some alternative process has been suggested for October filings,” said Saran. 

In a bid to jump-start electric mobility in the country and bridge the price-gap funding between fossil fuel-based vehicles and electric vehicles, the government launched the second phase of the FAME scheme in 2019.

Depending on the model, the FAME-II subsidy on an e-two wheeler ranges from Rs 20,000 to Rs 50,000. For e-three wheelers, it ranges from Rs 75,000 to Rs 1 lakh.

A senior official from the Ministry of Heavy Industry refuted the allegations.

“The ministry doesn’t halt transfers of subsidy to any company that has submitted the required documents for it. The subsidy is given after the company applies for it. The process takes 15-20 days,” he said.

The incentives under the scheme are given to several categories of vehicles using advanced batteries.

To begin with, the subsidy tap for Hero Electric and Okinawa and a few others was turned off by the ministry sometime in May after it received complaints about them.

“The ministry took action on the direction of the Prime Minister’s Office after it got a complaint from an e-two wheeler manufacturer regarding Hero and Okinawa,” said the ministry official.

The ministry has not formed any committee to investigate the matter. As of now, it has asked the companies to explain if they are importing products. Action will be taken only after verifying the claims, the official said.

As of now, there are no plans to probe other electric-vehicle segments for localisation, the official added.

A spokesperson for Hero Electric declined to comment.

Everything in an electric vehicle is sourced, unlike the internal combustion engine, where a lot of in-house manufacturing is done, said an official at a company being audited by the Automotive Research Association of India to ascertain if it meets localisation norms.

The spokesperson at Greaves Cotton declined to comment.

A spokesperson at Okinawa Autotech said the company had been following the FAME-II and other guidelines notified by the government.

The audits were done a few months ago as part of regular inspections done by testing agencies for all the OEMs (original equipment manufacturers), the spokesperson added.

“We have shared all the documentation with the testing agencies to their satisfaction. We are meeting 50 percent DVA (domestic value addition) criteria as per the government norms. Furthermore, at Okinawa, we ensure that the highest quality standards are met in all our products and processes,” the spokesperson added.