A top government official has dismissed the claims of an electric vehicle (EV) makers’ lobby group that claimed that halting their subsidies for the alleged violation of government norms was against the law.
“We go by the book. The rules are written in black and white. There is either violation or no violation. If they violate the rules, why should we continue giving them taxpayer money?” the official told ET.
The Ministry of Heavy Industries last year halted giving sops as part of a EV promotion scheme to multiple companies like Hero Electric and Okinawa Autotech after it was found that these companies allegedly imported the parts used in their vehicles despite claiming otherwise. The subsidies were part of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India Phase-2 (FAME-2)
The FAME-2 subsidies come with a rider of local sourcing of parts to promote the development of a local manufacturing ecosystem.
Following this, the Society of Manufacturers of Electric Vehicles (SMEV), a lobby of EV makers, wrote multiple letters to the parliamentary standing committee on electric and hybrid mobility. In one of its communications, the lobby group said that the action of the department of heavy industries in suspending subsidies to EV makers was “fundamentally bad in law.”
“There is no precedent, no allocation for this kind of action. There was no show cause; there was no dialogue, or discussions,” the letter read.
However, the official quoted above said that the government’s actions were in line with the guidelines of the FAME-2 scheme.
Further, the official said that the government will also look to recover money from these companies that was given prior to freezing their subsidies.
A final decision on the action to be taken against these companies will soon be taken after the government receives final reports on the matter from vehicle testing agencies Automotive Research Association of India (ARAI) International Centre for Automotive Technology (ICAT), the official said.
The EV industry has estimated that subsidies to the tune of Rs 1,100 crore have been so far withheld.
The FAME-2 scheme gives user-end subsidies to promote the adoption of EVs in India. Manufacturers are supposed to discount the subsidy amount during the sale of the vehicle, which is then reimbursed to them by the government. Subsidies for a two-wheeler typically range between Rs 15,000-60,000 for a two-wheeler. The FAME-2 scheme has a budget of Rs 10,000 crore.
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