The SFIO conducted raids on Hero Electric, Benling India, and Okinawa Autotech, accusing them of fraudulently obtaining INR 297 crore in subsidies through the FAME II scheme. Investigations uncovered that these companies failed to adhere to PMP guidelines, allegedly importing restricted components from China and falsely claiming subsidies intended to support domestic production.
The Ministry of Corporate Affairs announced on Monday that the Serious Fraud Investigation Office (SFIO) has conducted searches at the premises of three electric vehicle manufacturers: Hero Electric Vehicles, Benling India Energy and Technology, and Okinawa Autotech International. The companies are under investigation for allegedly fraudulently availing subsidies under the government’s Faster Adoption and Manufacturing of Electric Vehicles (FAME) II scheme.
Initial findings suggest that these companies collectively secured subsidies amounting to ₹297 crore by misrepresenting their compliance with the scheme’s guidelines. The FAME II scheme, launched in 2019 with an outlay of ₹10,000 crore, was designed to promote the adoption of electric and hybrid vehicles in India. A key component of the scheme is the Phased Manufacturing Programme (PMP), which mandates the local manufacturing of specific vehicle parts to qualify for subsidies.
The SFIO’s probe revealed that several restricted components, which should have been produced domestically under the PMP guidelines, were instead imported directly or indirectly from China. This practice is a violation of the scheme’s localization requirements. By importing these parts, the companies allegedly circumvented the PMP guidelines while falsely claiming eligibility for the subsidies.
During the search operations, the SFIO recovered digital data, financial records, and other pertinent materials that are expected to aid the ongoing investigation. The agency is meticulously analyzing the evidence to determine the extent of the alleged fraud and to identify any additional parties involved.
The government established the PMP guidelines within the FAME II scheme to bolster domestic manufacturing and reduce dependency on imports. The guidelines specify that certain key components must be sourced locally, and adherence to these rules is directly linked to the disbursement of subsidies. The intention is to gradually increase localization in the electric vehicle industry, fostering growth in the domestic manufacturing sector.
The Ministry of Corporate Affairs stated that the three companies had deceptively presented themselves as compliant with the PMP guidelines to the Ministry of Heavy Industries. This misrepresentation enabled them to unlawfully access subsidies for which they were not genuinely eligible. Such actions not only contravene the scheme’s regulations but also undermine the government’s efforts to promote indigenous production and technological advancement in the electric vehicle sector.
By allegedly failing to adhere to the localisation requirements while continuing to claim subsidies, the companies are accused of defeating the fundamental objectives of the FAME II scheme. The government is taking these allegations seriously, as they represent a significant breach of trust and could potentially have wider implications for the integrity of subsidy programs aimed at promoting sustainable technologies.
The SFIO’s investigation is ongoing, and further actions will be determined based on the findings. The Ministry of Corporate Affairs emphasized its commitment to ensuring that government schemes are implemented fairly and that any instances of fraud are thoroughly investigated and prosecuted. The outcome of this investigation could lead to stricter enforcement of compliance measures and more rigorous monitoring of companies benefiting from government subsidies in the future.
This development highlights the challenges faced by regulatory bodies in overseeing subsidy programs and the importance of transparency and accountability in corporate practices. The electric vehicle industry is a critical component of India’s strategy to reduce carbon emissions and promote sustainable transportation, and maintaining the integrity of supportive schemes like FAME II is essential for achieving these goals.
