FAME subsidy misuse, rules for availing incentives, role of ARAI and ICAT for compliance


Subsidies were availed flouting manufacturing norms under the FAME scheme.

The Ministry of Heavy Industries is investigating the role of ARAI and ICAT with regard to the violation of Phased Manufacturing Programme guidelines under the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME-II) scheme by select automakers.

  1. Few manufacturers availed subsidies under FAME with import content
  2. FAME incentivises manufacturers only for using locally sourced components
  3. ARAI and ICAT are responsible for ensuring this compliance  

“The investigation is underway. Procedural lapses and the role of officials that led to the funds being wrongly disturbed will be investigated,” Ministry of Heavy Industries Secretary Kamran Rizvi said on the sidelines of a government event today.

The government introduced the FAME-II scheme in 2019 with an outlay of Rs 10,000 crore. The scheme provided subsidies to two-wheelers companies to make electric vehicles in India in a bid to boost electric vehicle adoption and local manufacturing.

The guidelines permitted incentives for manufacturing electric vehicles using components made in India. We have already reported to you about the government’s investigation into the seven companies that violated the local sourcing norms by using imported components to claim incentives.

The government has asked the companies, which violated the guidelines, to refund the subsidies availed along with interest. Of these, two companies have reportedly refunded the incentives to the government.

The Automotive Research Association of India (ARAI) and International Centre for Automotive Technology (ICAT), under the Ministry of Heavy Industries, are responsible for ensuring the companies’ compliance with the manufacturing norms under the scheme.

“The probe is expected to be completed within a month, following which necessary actions will be taken” Rizvi added.  

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