Hero Electric wants Subsidy Misappropriation Settlement with Centre

Nitin Konde, Varun Bhardwaj

Oct 16, 2024 — 2 min read

Hero Electric Wants for Subsidy Settlement

The Ministry of Heavy Industries (MHI) has been approached by Hero Electric to resolve ongoing disputes and release pending electric vehicle (EV) subsidies, according to officials who briefed the media.

The manufacturer of electric motorcycles has committed to paying fines for any infractions or noncompliance. Hero Electric has contacted the Central Government in an attempt to get their outstanding problems resolved. "We are reviewing their request," a high-ranking government representative stated.

MHI's Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME India Phase II) programme benefitted Hero Electric, under the leadership of Naveen Munjal. Subsequently, an investigation revealed that the company and five other entities had violated mandatory localisation standards, leading to a government crackdown.

What Exactly the Conflict is?

The Ministry of Heavy Industries received complaints in 2022 from original equipment manufacturers (OEMs) registered under the scheme, alleging that Hero Electric, Okinawa, and Benling India were selling electric vehicles in violation of local sourcing regulations and were involved in rampant vehicle part imports. These complaints concerned the OEMs' disregard for the FAME-II guidelines.

After the ministry looked into 13 businesses, it was discovered that six of them—Hero Electric, Okinawa Autotech, Benling India Energy and Technology, AMO Mobility, Greaves Electric Mobility, and Revolt Motors—had violated the Faster Adoption of Manufacturing of Electric Vehicles (FAME-II) standards.

Among these businesses, AMO Mobility, Greaves Electric Mobility, and Revolt Motors obtained a clean sheet from the government after returning the subsidies plus interest amount in a matter of months. Nevertheless, Hero Electric, Okinawa Autotech, and Benling India were removed from the FAME-II programme as a result of their failure to refund the incentives.

The authorities declared in an official statement that Benling India, Okinawa Autotech, and Hero Electric had been deregistered. The next step is to be barred from all Ministry initiatives; this has already been applied to Benling India and Hero Electric. Since Okinawa was in court at the time, they were not barred.

Claims made by Centre and Hero Electric

Subsequently, the government requested that these EV manufacturers return the subsidies, arguing that they had been improperly used. Hero Electric refuted the charges of the government, while three companies returned the money. It also filed a lawsuit and demanded the release of INR 556 crore in unpaid subsidies for completed transactions.

On the other hand, the Centre claimed that Hero Electric had violated FAME II standards and attempted to recoup INR 133 crore along with penal interest. Hero has since sent the Centre a new message in an attempt to resolve the conflict.

The government representative stated that Hero has put out six proposals to resolve the conflict: a fine, a modification of the subsidy amounts, mediation, car and plant retesting, and third-party reinvetigation. According to the official, it also expressed its openness to 'any alternative corrective measure as may be offered by the ministry'.