The government has expanded its inquiry into the enterprises that have falsely claimed subsidies under the FAME II scheme by looking into another half a dozen manufacturers of electric two-wheelers.
The government is currently investigating the operations of about 18 companies to see if the subsidies were legitimately requested. According to people familiar with the development, the total amount of subsidy withheld has surpassed Rs 1,000 crore.
After discovering that the then-market leader’s Hero Electric and Okinawa Autotech had violated the program’s localization requirements, the government suspended them from receiving subsidies in 2022.
According to sources, the government has now hired accounting services company EY to conduct a financial audit of every business that has applied for subsidies under the program. ICAT and ARAI, two of India’s leading organizations for vehicle testing and validation, had completed the initial round of audits pertaining to auto components.
“EY wants to check our books of accounts for any misappropriation of the subsidies we claimed under the scheme. While no subsidies have been released since April, they have asked for financials of October and November too,” a senior executive of a company whose subsidies have been stopped, said.
With companies not inclined to continue production without subsidies, production and despatches to dealers nosedived in December and January, manufacturers said. The subsidy ranges from Rs 17,000 to Rs 60,000 per electric two-wheeler.
“Dealers are under pressure. While some are considering their options, others want to transition into multi-brand outlets. Financial institutions are no longer providing funding for inventory, and payments due to them are 180 days past due, according to an electric two-wheeler dealer who requested anonymity.
Battery manufacturers have reported a sharp decline in new orders while production has suffered. A year ago, their order books were full. In recent weeks, production has drastically decreased. We do not anticipate an increase in demand until there is clarity regarding subsidies, said the owner of a battery manufacturing business in the country’s north.
