Govt’s serious fraud unit investigates Hero Electric, Okinawa for violation of FAME-2

On suspicion of fraudulently flouting localisation norms to avail subsidies under the FAME-2 scheme, Hero Electric Vehicles Pvt Ltd, Okinawa Autotech International Pvt Ltd and Benling India Energy have been investigated by the Serious Fraud Investigation Office, livemint reported.

The Center's EV subsidy program, FAME 2, allowed manufacturers to apply for government subsidies and allowed consumers to purchase EVs at reduced costs. However, the Orignal Equipment Manufacturers (OEMs) have to fulfil the scheme’s localization norms to enjoy the benefit of the government’s scheme.  

According to the corporate affairs ministry, all three companies were found to have violated the FAME 2 phased manufacturing program (PMP) standards in order to receive subsidies of ₹297 crore. 

Mandating the localisation norms for EV OEMs, PMP guidelines give a list of vehicle components that are allowed to be imported, and the time period in which these imports should be phased out. 

According to the ministry, SFIO investigations showed that several parts that were prohibited by the PMP rules were either directly or indirectly imported from China.

There was no quick response to emails sent to Okinawa Autotech and Navin Munjal, managing director of Hero Electric. No one could be reached for comment from Benling India.

The update comes after the Ministry of Heavy Industries took proceedings against these corporations for two years. In 2022, MHI began pursuing EV manufacturers who were allegedly violating PMP regulations and sought reimbursement for the subsidies they had been given.

In total, 13 companies were being investigated by the ministry including AMO Mobility, Okinawa Autotech, Benling India, Lohia Auto and Hero Electric.

Within a few months, AMO Mobility, Greaves Electric Mobility, and Revolt—three of these six automakers—returned the subsidies along with interest. 

Benling, Okinawa, and Hero Electric, however, did not return the subsidy funds.

According to a report by the Economic Times citing government sources, Hero Electric made an attempt to pay the debt with MHI in October of this year while the company's request was being considered.