Ensuring the Success of the FAME II Scheme: Tackling Misappropriation of Subsidies by EV Manufacturers in India

The Government of India launched the Faster Adoption and Manufacturing of Electric Vehicles II (FAME II) scheme in 2019 to encourage the adoption of electric vehicles (EVs) in the country. The scheme provides subsidies for electric two-wheelers, three-wheelers, and four-wheelers to make them more affordable for consumers. However, recent reports suggest that some vehicle manufacturers are misusing the scheme to overprice their products and claim misappropriate subsidies from the government.

The FAME II scheme provides subsidies of up to 40% of the cost of the vehicle, depending on its category. This subsidy is given to the manufacturers, who are then supposed to pass it on to the consumers as a discount on the vehicle price. However, some manufacturers have been accused of inflating the prices of their vehicles to claim higher subsidies from the government.

For instance, in a recent investigation, the government found that some EV manufacturers were claiming subsidies for vehicles that did not meet the eligibility criteria under the FAME II scheme. Some manufacturers were also found to be misrepresenting the battery capacity and range of their vehicles to claim higher subsidies.

These practices not only defraud the government but also discourage the adoption of EVs by making them more expensive for consumers. The inflated prices make it difficult for consumers to benefit from the subsidies and make EVs cost-competitive with conventional vehicles.

The government has set ambitious targets for the adoption of EVs under the FAME II scheme. It aims to have one million electric two-wheelers and 7,000 electric buses on the road by March 2023. However, the misappropriation of subsidies by some manufacturers may hinder the achievement of these targets.

To address this issue, the government has tightened the release of FAME II subsidies and launched investigations into the alleged misappropriation of subsidies by some manufacturers. The government has also asked the manufacturers to pass on the subsidy to the consumers as a discount on the vehicle price and not to misuse it for their benefit.

In response, some manufacturers have denied any wrongdoing and claimed that they have followed all the guidelines under the FAME II scheme. The Electric Vehicle Manufacturers Association of India has also stated that the majority of EV manufacturers are not misusing the subsidies.

In conclusion, the FAME II scheme is an important initiative by the government to promote the adoption of EVs in India. However, the misappropriation of subsidies by some manufacturers is a cause for concern. The government needs to continue to monitor the implementation of the scheme and take strict action against any manufacturer found to be misusing the subsidies. By ensuring that the subsidies reach the consumers and making EVs more affordable, the government can encourage greater adoption of EVs and help to reduce the country’s dependence on fossil fuels.