EV Promotion Fame-2 Scheme Scam: Electric Scooter Firms Sell Half, Claim 3.5x Subsidy

A scam has been uncovered in the subsidy program introduced four years ago under the FAME-2 scheme, which aimed to increase the acceptance of electric vehicles. The government had announced a subsidy of ₹10,000 per vehicle to boost sales. However, manufacturers took advantage of unclear guidelines, selling only half the target number of e-vehicles while claiming three-and-a-half times the subsidy.

An internal investigation by the Ministry of Heavy Industries indicates that the delay in introducing the FAME-3 policy is due to the same reasons. The FAME-2 scheme was implemented in March 2019, targeting the sale of 7,090 e-buses, 5 lakh e-three-wheelers, and 10 lakh e-two-wheelers. However, the targets were not achieved, and additional funds were drained from the treasury. Now, efforts are underway to recover the excess subsidies. Two companies have been blacklisted, which account for 37% of the total sales. If the FAME-3 policy is implemented, a large section of manufacturers may be excluded.

How Companies Manipulated the System: Received ₹44,653 in Subsidy Instead of the Maximum ₹12,903

To promote low-cost vehicles instead of high-priced ones, it was decided that only e-scooters with an ex-factory value of ₹1.5 lakh would be eligible for the subsidy. Battery capacity standards were established, and a subsidy of ₹10,000 per kilowatt was determined. The subsidy was not to exceed 15% of the ex-factory price. The scheme emphasized indigenization, localization, and reducing indirect imports. However, the guidelines did not clearly specify the standards.

The FAME-2 scheme, initially meant to run for three years, increased its target for 10 lakh electric two-wheelers to 15 lakh. By the end of the scheme, only 7.19 lakh two-wheelers were subsidized. The total subsidy amount was supposed to be ₹2,000 crore, but ₹3,211 crore was given out, exceeding the target by 60%.

The Ministry of Heavy Industries intended to increase the overall number of two-wheelers, but that goal was not achieved. Only 2.29% of the total two-wheelers registered were electric vehicles.