Not in receipt of Centre's notice for subsidy recovery: Okinawa Autotech

Hitting out at allegations of purportedly violating subsidy norms, Okinawa Autotech (Okinawa) Founder and Managing Director Jeetender Sharma says the conditions of phase-wise localisation of components required to get the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) II subsidy scheme were relaxed by the government for two years off the back of a pandemic breakout.

Sharma clarifies that the “company has not received any notice from the government to refund subsidies since 2019-20”. He points out that Okinawa has always adhered to government policies and, in fact, was the first company in the industry to receive a FAME II certification in 2019.

“FAME II was announced in 2019 with several provisos — one of them was the phase-wise localisation of components over the next two years. However, due to two Covid waves, these norms were relaxed for all players,” he says.

But unidentified emails alleged that electric scooter companies continued to claim and receive subsidies, even though their localisation levels were way below 50 per cent — the minimum prerequisite to be eligible for subsidies.

“The government has recently reopened the audits for 2020 and 2021 for all companies importing certain components not manufactured in India. The issue is industrywide, and the Ministry of Heavy Industries has relevant proof of all original equipment manufacturers (OEMs),” says Sharma.

He believes the government will be fair in its assessment and the ruling will be consistent across players.

“In the meantime, we expect the government to resolve the issue of pending subsidies that have been on hold for the past 12 months” he adds.

Okinawa and Hero Electric have been in the eye of the storm, with government sources informing that they are starting the process of recovery of subsidies worth over Rs 250 crore from the two players — and their deregistration.

Claim to ‘FAME’

• The FAME certification for eligibility of subsidy issued in the first quarter of 2018-19 had a validity until March 2020, but there were five extensions given beyond March 2020 until the third quarter of 2021-22: Hero Electric
• In a fresh audit, all companies had been importing some components in 2019-20 as they were not being manufactured in India

The company whose subsidies have been withheld has seen a substantial fall in its scooter registrations, with its market share falling to 10 per cent in April — nearly a third of what it was in calendar year 2022.

Similar views were echoed by Hero Electric Chief Executive Officer Sohinder Gill. Answering a query on why the company availed of subsidies, regardless of failing to meet the 50 per cent localisation norm eligibility criterion, Gill says: “The FAME certification for eligibility of subsidy issued in the first quarter of 2018-19 had a validity until March 2020, but there were five extensions given beyond March 2020 until the third quarter of 2021-22.”

The issue, says Gill, cropped up over differences in interpretation of the validity of the FAME certificates and the stipulated deadline for localisation under the policy.

Gill, however, says that discussions with the Ministry of Heavy Industries are at an advanced stage for a consensus on an OEM-wise validity date based on a practical and flexible approach the ministry has adopted in all other “cases of under-invoicing, misinterpretation of battery power, among others”.

Gill says that discussions are on and the company looks forward to a quick conclusion of the process so that pending subsidies may be disbursed at the earliest to OEMs like Hero Electric.