SFIO raids Hero Electric, Benling, Okinawa for FAME subsidy misappropriation

The Serious Fraud Investigation Office (SFIO), under the Ministry of Corporate Affairs, has conducted search operations at electric vehicle makers Hero Electric, Benling India and Okinawa Autotech's as part of the ongoing investigation over alleged FAME II scheme fund misappropriation case.

The cases arise from alleged fraudulent availing of subsidies amounting to Rs 297 crores by all three companies under the Faster Adoption and Manufacturing of Electric Vehicles (FAME) II scheme of the Ministry of Heavy Industries.

The government introduced the FAME II scheme in 2019 with an outlay of Rs 10,000 crore. The scheme provided subsidies to two-wheeler 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. The subsidy was given based on the Phased Manufacturing Program (PMP) guidelines under the scheme, which was set to ensure a certain percentage of localization. 

“The three companies, for claiming subsidies had deceptively shown compliance with the applicable guidelines to the Ministry of Heavy Industries, which was subsequently found to be incorrect and false,” the Ministry of Corporate Affairs said in a statement. 

The ministry noted that the investigation by SFIO showed the three companies either directly or indirectly imported several restricted parts under the PMP guidelines from China. The search operations recovered related pieces of evidence like digital data, books and other material from the companies.