Three electric vehicle manufacturers including Hero Electric, Okinawa under investigation for alleged FAME-2 fraud

Electric two-wheeler manufacturers such as Hero Electric, Okinawa Autotech International, and Benling India Energy and Technology are under investigation by the central agency. These are under investigation for fraud in availing incentives offered under the now-defunct Faster Adoption and Manufacturing of Electric Vehicles (FAME) II scheme of the Ministry of Heavy Industries (MHI). The office premises of the three EV manufacturers were raided by the Serious Fraud Investigation Office (SFIO). In which it was alleged that they had grabbed subsidies worth about Rs 297 crore.

The probe is part of a drive against EV manufacturers who allegedly misused the incentive scheme by violating rules and regulations. The FAME II scheme, launched in 2019 to promote electric vehicles in India, had a total outlay of Rs 10,000 crore. It gave manufacturers incentives to use components made in India for their vehicles. The probe found that some EV manufacturers did not comply with this regulation and used parts imported directly or indirectly from China.

SFIO conducted the search operation against Hero Electric, Okinawa, and Benling India for FAME-II fraud amounting to Rs 270 crore. "The three companies had falsely shown compliance of the applicable guidelines to MHI in order to avail of the subsidy which later turned out to be incorrect and false," it said. It added that three companies manufactured their models using a number of banned parts under the FAME-II scheme.

The Ministry of Heavy Industries had earlier conducted a probe following an anonymous email complaint that several EV manufacturers were claiming subsidies in "clear violation" of the rules to encourage local manufacturing of such electric vehicles under the Phased Manufacturing Plan (PMP). The investigating agency, SFIO, comes under the Ministry of Corporate Affairs. A statement issued by the ministry on Monday said, "Evidence such as digital data, books, and other material have been recovered during the search operation. Further investigation is underway."

According to media reports, none of the three electric two-wheeler manufacturers have so far responded to the allegations of search operations at their premises. The central government may blacklist those electric vehicle manufacturers. Who have violated the FAME-II guidelines to claim subsidy in the upcoming Electric Vehicle Incentive Scheme FAME-III. The Center may also initiate legal action against these electric two-wheeler manufacturers for fraud.