Over Rs 300 crore FAME-II subsidy stuck on Aadhaar card, RC mismatch

Over Rs 300 crore of FAME 2 subsidy, which has to be disbursed to auto companies, especially those manufacturing electric two-wheelers, is stuck because of a mismatch between the vehicle buyers’ name as per their Aadhaar card and that in the registration certificate (RC), according to auto players.  

The two documents have to be submitted along with the invoice by the manufacturer to the government and the Industrial Finance Corporation of India (IFCI) to claim the subsidy. IFCI administers FAME 2 on behalf of the government.

The issue is two-fold. In states like Maharashtra, a person’s father's name is often their middle name. While the Aadhaar card reflects this tradition, at the time of the registration of a vehicle, the consumer drops the middle name, leading to a mismatch. In other cases, surnames are spelt differently in the two documents — a common problem in a country where the same surname can be spelt in multiple ways. 

Auto companies, especially makers of electric two-wheelers, say that in such cases the government has been withholding the subsidy for months, without offering any resolution on the issue.  

They say that in cases where there is a mismatch, the subsidy has been pending since December 2022 and the issue has still not been resolved. Moreover, the delay in disbursements is increasing. At least one company estimates that nearly 15 per cent of the subsidy claims are currently being withheld by the government either at the IFCI or at the department of heavy industries.

Auto companies are facing issues with their auditors and bankers too. “Our auditors are questioning us as to why the subsidy is being shown as receivables in our books for such a long time. They are asking that the payee should give a letter of undertaking that the money is pending. If not, the company should write off the amount in its books. Obviously, the government is neither rejecting nor ready to give a letter of comfort that the money will come. So we are in a quandary,” says a top executive of an electric two-wheeler company. 

He also points out that banks which provide working capital loans are not willing to account for subsidies as receivables while sanctioning limits.   

Two-wheeler companies say that the problem mostly arises in scooters which are not sold through a finance scheme. In the case of cars the number of such mismatches is limited because, thanks to their higher price, most customers opt for a car loan.

In the case of electric scooters about 30 per cent of the buyers go for upfront payment. When the customer opts for a finance scheme, however, a detailed scrutiny is undertaken by the finance company before it grants a loan for buying a two-wheeler.

Industry players say that the peculiar issue has led to an average delay of four to six months in processing the subsidy after submission. And the problem has been exacerbated by the shortage of manpower in the ministry of heavy industries and the IFCI. The transfer of key officials is also adding to the delay.

Many say that the Delhi government, which provides the state subsidy through a direct benefit transfer scheme, has been able to resolve the issue by clearing proposals in which 70 per cent of the name matches as long as there are other supporting documents.