Facing the heat: Govt slaps Rs 249-crore fine on Hero Electric, Okinawa

Hero Electric claimed that its vehicles were fully in compliance with the FAME certification in the subject period

Amid ongoing investigation into misappropriation of subsidy under the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) II, the Centre on Saturday issued recovery notices totalling Rs 249 crore to Hero Electric and Okinawa Autotech (Okinawa), Business Standard has learnt.

According to the notice issued by the Ministry of Heavy Industries dated April 29, Hero Electric and Okinawa will need to repay Rs 133 crore and Rs 116 crore, respectively, to the central government. Business Standard has reviewed a copy of these notices.

Both companies are hereafter “deregistered” from the FAME II scheme and the “recovery of incentives claimed from 2019–20 (FY20) will be done within a month”, informed senior officials.

“Any representation in respect of the above actions proposed by the Ministry of Heavy Industries may be filed by Hero Electric and Okinawa Autotech within seven days from the date of issue of this letter, failing which further action, according to law, will be taken,” reads the ministry notice. Hero Electric in a statement to this paper acknowledged receiving the notice. Okinawa did not until the time of going to press.

Hero Electric, however, claimed that its vehicles were fully in compliance with the FAME certification in the subject period.

“Yes, we have received a letter referring to the bikes manufactured three to four years back. We have checked the FAME localisation guidelines in the subject period and find that our bikes fully comply with the Central Motor Vehicles Rules/FAME certificates and their extensions in the subject period,” said Sohinder Gill, chief executive officer, Hero Electric, in a statement to Business Standard. 

He further added: “In Ministry of Heavy Industries’ letter, there is no reference to the checks and audits done on our current range of bikes as has been done for all other original equipment manufacturers (OEMs) and are awaiting the ministry’s report on the results of any investigation carried out on them.”

“The company hasn’t received any notice from the government to refund subsidies from FY20. Okinawa has always adhered to government policies. The issue is industry-wide, and the ministry has the relevant proof of all OEMs. We believe the government will be fair in its assessment and its ruling will be consistent across industry players, and not just Okinawa,” said Jeetender Sharma, managing director and founder, Okinawa, adding it is expecting the government to also resolve the issue of pending subsidies which have been on hold for the past 12 months.

The action against the two-wheeler manufacturer came after the ministry’s investigation report concluded that there had been rampant use of imported parts — a clear violation of the Phased Manufacturing Programme guidelines allegedly by these two OEMs.

The ministry has asked both companies to deposit the amount within 21 days from the date of this notice.

The amount will be recovered with the interest calculated at three years marginal cost of funds-based lending rate of State Bank of India prevailing as on the date of respective disbursement.

Ola to pay Rs 130 crore to customers

Ola Electric on Sunday informed the Ministry of Heavy Industries about its willingness to reimburse Rs 130 crore, which it has received from its customers for ‘off-board chargers’ to about 100,000 vehicle owners of the S1 Pro model.

With the decision, each Ola S1 Pro owner will get around Rs 13,000.

The two-wheeler manufacturer has also urged the ministry to release pending claims of Rs 500 crore, which the ministry has withheld after allegations of misappropriation.

Apart from the reimbursement, the company has already added the off-board charger as part of the ex-factory scooter price, starting March 31. Ola did not furnish an explanation until the time of going to press.