Indian electric two-wheeler company, Hero Electric has been reported to be awaiting a formal communication from the Ministry of Heavy Industries towards quickly resolving the subsidy deadlock.
Resolving it could be the first step to help the EV company recover Rs 500 crore held up with the Department as unpaid subsidy quickly.
According to some possible industry insiders, there is a possibility that Hero Electric will be asked to give back the subsidy.
“In our recent exchanges with the Department, we have been made aware of the efforts by the Department to find a solution that passes muster by due process at the ministry level and are confident that a practical solution is round the corner,” Sohinder Gill, CEO, Hero Electric, said in a statement.
Last year, a probe was launched into the implementation of the Rs 10,000-crore FAME II scheme following allegations of fake localization claims and incorrect subsidy claims by 12 electric two-wheeler makers.
The FAME II scheme’s subsidy was aimed to incentivize EV manufacturers to use more locally produced parts.
Gill said that Hero Electric has followed the entire CMVR (Central Motor Vehicles Rules) and certification process for manufacturing and selling its entire range of E-bikes for the last 15 years.
“Another fact that should be considered is the real objective of FAME 2 guidelines. Localization to the value of 50 per cent is a guiding light. However, a shortfall of 5 or 7 or 10 per cent in the final product should not be read as a willful default, but a logistical crunch,” Gill noted.
Earlier, “the Department was cognisant about the limitations and continued to offer extensions, but after the notorious anonymous emails, it reacted suddenly and without warning, which caused the huge financial imbalance in the books of most OEMs,” he added.
“Late entrants like Ola, Bajaj, TVS, Kinetic, Okaya benefitted thanks to the supply chain that was beginning to take off in small numbers,” Gill said.
Most of the OEMs are now getting supplies from the leading Indian battery, motor, controller and other component suppliers and, therefore, almost all the players have an uninterrupted supply of quality local components which was not the case prior to 2022.
“The issue that needs to be resolved is therefore about the 2 to 3 years beginning 2019 that had no supply chain and also suffered a Covid blackout period from whatever small-scale Indian components were trying to do,” the Hero Electric CEO stressed.
It has come to light that the government is likely to issue recovery notices to Hero Electric and Okinawa Autotech after a probe found they allegedly violated provisions of the FAME II scheme.
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