Stricter screening measures implemented by MHI for EV OEMs.

May 4, 2023
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April 4, 2023:The Ministry of Heavy Industry (MHI) in India has implemented stricter screening measures for electric vehicle (EV) original equipment manufacturers (OEMs), leading to significant financial implications. The total impact of these measures roughly around  Rs 837 crore. As a result, the EV industry will have to refund Rs 292.23 crore to customers and pay an estimated amount of Rs 545 crore as subsidy recoveries under the FAME II scheme. The MHI has initiated the process of detangling the Rs 1,500 crore subsidy to address this issue.

The tightening of screening measures by the MHI was a direct response to concerns expressed by the Prime Minister's Office regarding the slowdown in India's EV sales due to the impasse in the FAME II scheme. 

The EV charger refund issue emerged following complaints from Akash, a Chartered Accountant who brought the subsidies issue into the public domain. The MHI investigated the matter with the assistance of testing agencies such as ARAI, ICAT, and IFCI. It was discovered that certain OEMs were allegedly overcharging consumers by selling portable chargers separately, which were meant to be included in the EVs' price. This resulted in financial losses for consumers. Based on their investigations, the planned recoveries amount to over Rs 800 crore.

The testing agencies, ICAT (International Centre for Automotive Technology) and ARAI (Automotive Research Association of India), have provided inputs to the MHI regarding the FAME II subsidy violation issue.

The recovery amounts from different EV manufacturers are as follows:

Ola: EV Chargers  Rs 130 crore
Ather (approximate): EV Chargers  Rs 140 crore
Hero MotoCorp: EV Chargers  Rs 2.23 crore
TVS: EV Chargers  Rs 20 crore
Ather (approximate): Reduced battery capacity due to not buying upgraded software  Rs 25 crore
Hero Electric: Wrongly claimed subsidies  Rs 100 crore
Okinawa: Wrongly claimed subsidies  Rs 120 crore
Rest of FAME II players entitled to subsidies: Wrongly claimed subsidies  Rs 300 crore

The total recoveries from EV players amount to Rs 837.23 crore, while the total EV subsidies due from players amount to Rs 1,500 crore.

The slowdown in India's EV sales shows that there were 66,410 two-wheeler EV registrations in April, compared to 86,187 units in March as per data from the Vahan portal. This represents a 23% month-on-month decline, attributed to the ongoing issues and uncertainties surrounding the FAME-II scheme. According to the FAME policy document, electric two-wheelers costing up to Rs 1.50 lakh per unit are eligible for benefits under the Rs 10,000 crore program.

In response to the subsidy violation issue, the manufacturers, Ola Electric has agreed to refund Rs 130 crore, Ather Energy will refund Rs 140 crore, TVS Motors will refund Rs 20 crore, and Hero MotoCorp will pay Rs 2.23 crore to the MHI.

The companies, in their letters to ARAI, have stated their intention to reimburse 100% of the cost of the off-board or portable charger to all consumers who purchased them as accessories while buying e-two-wheelers from their authorized dealerships.

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