According to the EV Makers Body, customers will be asked to return rebates on electric 2-wheeler purchases due to the cancellation of subsidies

A group of seven manufacturers of electric two-wheelers requested the government on Friday to consider the prospect of requiring consumers to repay any extra rebate they received on the purchase of the vehicles after coming under fire for suspected abuse of subsidies.

The Society of Manufacturers of Electric Vehicles (SMEV) wrote to Minister of Heavy Industries M. N. Pandey stating that consumers who have received such incentives may be required to return them to the responsible OEMs.

For claiming incentives while not abiding by the Faster Adoption and Manufacturing of Electric Vehicles (FAME) II program regulations, the Centre has demanded Rs 469 crore from seven manufacturers of electric two-wheelers, including Hero Electric and Okinawa.

 

Sanjay Kaul, the chief evangelist for the Society of Manufacturers of Electric Vehicles (SMEV), said in the letter, “This is about the subsidies your department has claimed back from OEMs on retrospective basis: And this also holds for the Rs 1,200 crores that the OEMs claim remains un-reimbursed.”

 

Kaul, a former BJP spokesman, has been hired by SMEV to assist in updating the group’s agenda.

 

It is possible that the money your department is currently demanding from the other set of OEMs for non-compliance can be similarly recovered by them from the customers and returned to the Department, Kaul said, given that your department penalized some OEMs a few months ago for overcharging the customers and then asked them to return the amounts.

 

Even if the adjustment is made retroactively, the buyer is still responsible for returning any discounts they obtained in excess of the proper price.

 

“The customers who have taken such subsidies can be asked to return these to OEMs in all fairness,” Kaul said. “Since the MHI is suggesting that the subsidies passed on to customers by OEMs now stand cancelled — due to technical reasons decided by MHI Department subsequently.”

 

The OEMs may then return these funds to you, thereby canceling the FAME subsidy commitments, as you have denied the OEMs the ability to receive subsidies based on choices made by your Department.

 

According to Kaul, OEMs have shown a readiness to share consumer information with the government so that it may be impacted by a press release.

 

“Or, they are willing to take out a Public Notice asking such customers to deposit back the excess rebates they had received as subsidy, under the Department’s guidance,” the speaker said.

 

He suggested that in order to iron out the specifics of this idea, it could be appropriate for the OEMs to call a meeting with MHI representatives.

 

“At first glance, it seems to be a contrarian position—or at the very least, a Herculean task—but with careful consideration—even legally—it appears that the notion has substance. According to Kaul, “I think this may contain the key to an effective and fair solution to the problem afflicting the industry and also retain the Ministry’s stance.

 

“There is a great analogy between the two: one overcharged and the other overpaid. I had this examined from a legal perspective, and it appears to stand up,” he said.

 

Hero Electric, Okinawa Autotech, Ampere EV, Revolt Motors, Benling India, Amo Mobility, and Lohia Auto have all agreed to pay back government subsidies.

 

According to a heavy industries ministry inquiry, these businesses took advantage of the program’s tax benefits by breaking the rules.

 

According to the scheme’s guidelines, incentives were permitted to create electric cars using made in India components, but the examination revealed that these seven enterprises may have utilized imported parts instead.

 

After receiving anonymous letters stating that multiple EV manufacturers were claiming subsidies without abiding by the Phased production Plan (PMP) laws, which are meant to increase local production of these electric cars, the ministry launched the inquiry.

 

Following that, the government postponed the allocation of subsidies for the previous fiscal year.

 

A Rs 10,000 crore initiative under the FAME-II plan was launched in 2019 to encourage electric and hybrid cars. It is a more comprehensive version of the current FAME India I (Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles) initiative, which was introduced on April 1, 2015, with a total investment of Rs 895 crore.

 

Incentives are mostly applicable to vehicles used for registered business purposes or for public transportation in the three-wheeler and four-wheeler sectors. Private automobiles are the main focus of the two-wheeler market.