India Probing 12 EV Makers Over Alleged Misappropriation of Government Subsidies

Jain monks ride on an electric vehicle along a street in Ahmedabad, India, on Nov. 20, 2021. (Sam Panthaky/AFP via Getty Images)

India has launched a probe into the alleged misappropriation of incentives given under a 100 billion rupee ($1.2 billion) scheme, which was designed to accelerate the adoption of electric vehicles (EVs) in the country.

Indian Minister for Heavy Industries Mahendra Nath Pandey told Parliament on Tuesday that the investigation was initiated in response to complaints received by the ministry involving 12 local automakers.

“All the complaint cases have been referred to the testing agencies for re-verification,” Pandey said in his written reply to Parliament.

Pandey said that scheme subsidies for two automakers had been suspended following a review of complaints, and processing of their pending claims had been stopped until they provide evidence of compliance. The minister did not disclose the names of the companies.

India launched the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme in 2015 to promote EVs through purchase subsidies and production incentives. The country aims to attain 30 percent EV adoption by 2030.

“This scheme helps in the demand generation of electric vehicles by way of reducing the cost of acquisition of such vehicles. As the demand for electric vehicles increases, the pace of implementation of FAME Indian scheme also increases,” Pandey said.

The minister claimed that the sale of EVs in India increased from 19,100 units in the 2019–2020 period, when the scheme first launched, to 442,901 units as of Dec. 9, 2022.

Industry Body Refutes Complaints

However, the Indian Society of Manufacturers of Electric Vehicles (SMEV) refuted the claims, saying that the government failed to address the underlying impact of COVID-19 on the market and production, which rendered automakers unable to meet the scheme guidelines.

EV two-wheeler makers are required to have at least 50 percent of their EV components domestically manufactured and locally sourced to qualify for the subsidy, according to local reports.

SMEV Secretary General Ajay Sharma attributed the alleged misappropriation to India’s supply chain policy, which failed to “respond to the impractical norms,” saying that automakers “do not run the supply chain.”

“If there is any misappropriation, it rests in the hands of customers who have bought these EV scooters and who provided these subsidies on orders of the department,” Sharma said, Outlook India reported.

Among the 12 companies are Avon Cycles Ltd., Hero Electric Vehicles Private Ltd., Okinawa Autotech Private Ltd., Benling India Energy and Technology Private Ltd., and Okaya EV Private Ltd.

Avon Cycles has denied allegations that it misappropriated the incentives. The company claimed that it does not have any two-wheeler model covered under the scheme, while its three-wheeler models met the requirements, Reuters reported.