Centre launches probe into ARAI, ICAT for misappropriation of FAME subsidies

    Subsidies were availed flouting manufacturing norms under the FAME scheme.

    Published On Nov 23, 2023 12:07:00 PM

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    FAME subsidy misuse
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    The Ministry of Heavy Industries is investigating the role of the Automotive Research Association of India (ARAI) and the International Centre for Automotive Technology (ICAT) over the violation of the FAME II subsidy 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 recently.

    1. A few manufacturers availed subsidies under FAME with imported components
    2. FAME incentives only for manufacturers using locally sourced components
    3. ARAI and ICAT are responsible for ensuring this compliance  

    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 EV adoption and local manufacturing. The Phased Manufacturing Programme guidelines permitted incentives for manufacturing EVs using components made in India.

    Earlier this year, the central government had investigated seven companies that 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.

    ARAI and ICAT, under the Ministry of Heavy Industries, are responsible for ensuring the companies’ compliance with the manufacturing norms under the scheme.

    “The probe is expected to be completed within a month, following which necessary actions will be taken,” Rizvi added.  

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