FAME II penalties: Several two-wheeler EV makers at risk of bankruptcy, write to PMO

Following the imposition of FAME II penalties by the Ministry of Heavy Industries (MHI), many two-wheeler Electric Vehicle (EV) makers in India may be forced to file for bankruptcy.

Notably, Rs 500 crore penalty has been imposed for violating the Phased Manufacturing Programme (PMP) norms that require 50 percent of manufacturing to be done with locally sourced components, and the deadline for paying the penalty is this week.

As per an Autocar India report, the MHI has found over seven enterprises guilty of failing to comply with manufacturing norms. As the deadline for penalties looms, three out of the seven Original Equipment Manufacturers (OEMs) – Hero Electric, Benling Motors and Amo Mobility – have requested the Prime Minister's Office to press the Ministry of Heavy Industries to resolve the issue.

The government has issued notices on penalties worth Rs 500 crore to Hero Electric, Okinawa Autotech, Greaves Electric Mobility, Benling India Energy, Revolt Intellicorp, and AMO Mobility. The individual amounts of Rs 249 crore from Okinawa Autotech (Rs 116 crore) and Hero Electric (Rs 133 crore), Revolt (Rs 44 crore), and Amo Mobility (Rs 80 lakh), have been demanded by the government.

The note to the MHI said, "It is in the interest of the component makers, investors, and other ecosystem providers who have made substantial investments of over Rs 3,000 crore, that the government develop a settlement mechanism to pay the Rs 1,500 crore that the government owes to the industry players and Rs 500 crore that the industry must pay for policy violations.”

According to the letter, MHI's refusal to reinstate their accreditation to the National Automotive Board (NAB) website, which has been blocked, has hampered the OEM's ability to apply for the FAME-II subsidy.