Hero Electric, Okinawa among 3 EV makers under scanner for alleged FAME-II fraud

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Electric two-wheeler manufacturers like Hero Electric, Okinawa Autotech International and Benling India Energy and Technology are under the central agency scanner for fraudulently availing incentives offered under the now-expired Faster Adoption and Manufacturing of Electric Vehicles (FAME) II scheme of the Ministry of Heavy Industries (MHI). The office premises of the three EV makers were raided by the Serious Fraud Investigation Office (SFIO) amid allegations that they have siphoned off subsidies worth around ₹297 crore.

The investigation is part of drive against EV makers who have allegedly misused the incentive scheme by violating rules and regulations. The FAME II scheme, launched in 2019 to promote electric vehicles in India, had an overall outlay of ₹10,000 crore offering incentives to manufacturers for using components made in India for their vehicles. The investigation found some of the EV makers did not comply with this regulation and used parts directly or indirectly imported from China.

FAME-II fraud: Hero Electric, Okinawa premises raided

The search operation by SFIO was conducted against Hero Electric, Okinawa and Benling India for FAME-II fraud to the tune of ₹270 crore. The agency said, “The three companies, for claiming subsidies had deceptively shown compliance with the applicable guidelines to the MHI, which was subsequently found to be incorrect and false." It said all three companies used several restricted parts under the FAME-II scheme to build their models.

Earlier, the Ministry of Heavy Industries had conducted the investigation after receiving anonymous emails alleging that several EV makers were claiming subsidies without complying with the Phased Manufacturing Plan (PMP) rules to boost domestic manufacturing of these electric vehicles. The investigating agency SFIO comes under the Ministry of Corporate Affairs. "During the search operations, evidences like digital data, books and other material have been recovered. Further investigation is under progress," read a statement issued by the ministry on Monday.

None of the three electric two-wheeler manufacturers have responded to the allegations of the search operations at their premises till now. The Centre is likely to blacklist the EV makers who have flouted the FAME-II guidelines to claim subsidy in the upcoming EV incentive scheme FAME-III. The Centre may also initiate legal actions against these electric two-wheeler manufacturers for the fraud.

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