Government probes ARAI, ICAT in FAME subsidy misappropriation case

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

“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. But a government investigation last year found that seven companies 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 probe is expected to be completed within a month, following which necessary actions will be taken” Rizvi added.  

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