SFIO conducts searches at 3 EV firms in ₹297 cr FAME-II subsidy fraud case

The Serious Fraud Investigation Office (SFIO) has carried out search operations at three electric vehicles manufacturing companies namely Hero Electric Vehicles Private Limited, Benling India Energy and Technology Private Limited, and Okinawa Autotech International Private Limited. These cases stem from the fraudulent receipt of subsidies totalling ₹297 crores by all these three companies under the Faster Adoption and Manufacturing of electric vehicles (FAME) II scheme, according to the ministry of corporate affairs statement in a release.

Under the FAME II scheme and the Phased Manufacturing Programme (PMP) guidelines, some key components were required to be manufactured in India for vehicles to qualify for subsidies. The SFIO search operations revealed that certain restricted parts under the PMP guidelines were either directly or indirectly imported from China, failing to comply with the requirements with the PMP guidelines, it adds.

“During the search operations, evidences like digital data, books and other material have been recovered,” it states.

The FAME II scheme was introduced in 2019 to encourage the adoption of electric and hybrid vehicles in India. The three companies, in their bid to claim subsidies, falsely represented their compliance with these guidelines to the Ministry of Heavy Industries (MHI), which was subsequently found to be incorrect.

In July, the government extended the EMPS (Electric Mobility Promotion Scheme) 2024 by two months till September 30, 2024 with an enhancement outlay of ₹778 crores. The EMPS scheme was originally set to run from April 1, 2024, to July 31, 2024, with a total outlay of ₹500 crore.

It was reported last year that the MHI received complaints against 17 OEMs (Original Equipment Manufacturers) mainly due to two concerns which are PMP compliance and breach of ex-factory price. This followed with MHI taking steps for investigation against the OEMs, firstly disbursement of demand incentive was put on hold and secondly matter was referred to testing agencies of MHI for detailed investigation. After the examination, the report revealed that six were fully compliant with PMP norms, while seven were found in violation with PMP guidelines. Additionally, four OEMs agreed to refund the excess amount to EV customers for the Breach of Ex-factory price.