If OEMs refuse to return money, legal recourse will be taken: Kamran Rizvi

Amid the ongoing investigation against 17 original equipment manufacturers (OEMs) over violations of the phased manufacturing programme (PMP) and ex-factory price norms, KAMRAN RIZVI, secretary, Ministry of Heavy Industries, warns the errant companies of legal action — ranging from civil liability to criminal liability — if they refuse to return the wrongfully claimed subsidy money to the government. In an interview with Nitin Kumar, he also says that the wheels are moving towards a third phase of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme. Edited excerpts: 

The ministry is probing 17 OEMs under its localisation and ex-factory price investigation. What has been found so far? 
 

We were investigating a total of 17 OEMs for PMP guideline violations. Of these 17 firms, four — Ola Electric, Ather Energy, TVS, and Hero MotoCorp’s Vida — were also probed over ex-factory price violations.

These four OEMs were bypassing the subsidy eligibility limit of Rs 1.5 lakh by separating the ‘electric vehicle (EV) charger’ from the cost of the vehicle.

Ather was also charging customers for software upgrades. Ather vehicle had a battery pack of 3.7 kilowatt (kW), but only 2.2 kW was available for customer use. To unlock the remaining capacity, customers had to pay extra, which was against FAME II guidelines. 

We found that these four OEMs were in breach of ex-factory guidelines but not localisation norms. All violators of ex-factory guidelines have agreed to reimburse the money they charged for ‘EV chargers’.

All four OEMs have initiated the reimbursement process to pay back a total of Rs 288 crore to customers. Now, charger costs have also been included in the ex-factory price.

A total of 13 OEMs were under investigation for only PMP violations. Of which, seven automakers — Hero Electric, Okinawa Autotech, Ampere Vehicles (Greaves Cotton), Benling India, Revolt Intellicorp, Amo Mobility, and Lohia Auto — were found to be using imported products in violation of the phased manufacturing guidelines.

Of these, Revolt Intellicorp and Amo Mobility have offered to repay the ministry for the subsidy amount they claimed.

Some OEMs, which were subject to the PMP guideline violation, have questioned the ministry’s investigation. What is the ministry’s take on this? 

The investigation was done in a transparent manner by our testing agencies, the Automotive Research Association of India (ARAI) and the International Centre for Automotive Technology, which are the nodal agencies in this regard.

A strip-down test was done for every OEM model. Two units of each model sold by an OEM since 2019 were repurchased from their existing owners and tested in front of respective OEM representatives.

A detailed report of the test results was also sent to the respective OEM.

It has been more than two months since the ministry first sent notices to the PMP violators to reimburse the money. Why is it taking so long, and what actions can be taken if the OEMs fail or refuse to repay?

The delay is because some OEMs requested a deadline extension to submit their replies. But now we are at the final stage of closure.

We have asked the OEMs to return the wrongfully claimed subsidy money to the government, or we will move forward with legal action, ranging from civil liability to criminal liability, according to law.

A total of Rs 469 crore has to be repaid to the government by the defaulting OEMs.

Some OEMs that were under investigation have claimed that the ministry has halted their subsidy since mid-2022 and refused to settle their claims. What is the ministry’s stand on this?

During our investigation, we debarred all 17 OEMs. Subsidies for those who have received a clean chit from the testing agencies are being disbursed. For those who were found violating the norms, their subsidies cannot be disbursed as they were removed from the FAME scheme portal and have no locus standi for claiming incentives.

Will there be an extension for the FAME beyond the March 2024 deadline or a FAME III?

We have received such requests from the industry. Currently, the matter is under consideration.

Siam has raised concerns about payment in production-linked incentive (PLI) for auto since April 2022. The industry has also raised concerns over delays in the release of standard operating procedures (SOPs) for PLI. How is the ministry planning to address the issue?

We have already started issuing certificates for Auto PLI. Two certificates were issued to Mahindra & Mahindra recently. We are in the process of issuing more such certificates soon to other OEMs as well.

We came up with these SOPs after having several rounds of industry stakeholder consultations. Our SOPs could be used as the benchmark for calculating domestic value addition.

After we found cases of violation in FAME, we revisited the scheme and issued a fresh SOP so that once an OEM has been given an eligibility certificate, it will get incentives for the complete tenure of the scheme.

What is the development in PLI for advanced chemistry cells?

We are in the process of coming up with the next round of bids for 20 gigawatt of capacity. Stakeholder consultations are likely to start by the end of this month. 

The ministry gave an extension of six months to OEMs for the latest battery safety certification. What were the reasons for the deadline extension? Are you planning to come up with revised guidelines?

A committee headed by the ARAI director is re-examining these norms. We will make a decision based on the committee’s report.

The government wants to achieve a 40 per cent e-bus penetration target by 2030. However, there are only 4,506 e-buses (1.25 per cent) in the country. Are you planning some new mechanisms to increase the penetration of e-buses?

We are working on a payment security mechanism with the US. This partnership will facilitate the deployment of 10,000 made-in-India e-buses in India.

After making losses for years, Bharat Heavy Electricals Limited (BHEL) has now turned profitable. How are you planning the revival of the nation-building public sector undertaking?

Today, BHEL is working on building 80 Vande Bharat train sets and has diversified its portfolio into businesses like transmission, solar, and wind energy. BHEL is working on finalising a joint venture for electrolyser manufacturing, which is in line with the National Green Hydrogen Mission.

Right now, 25 per cent of BHEL’s revenue comes from non-thermal operations. It is working to take this to 50 per cent.