Cost of FAME 3: Meet local sourcing norms or face penalty
incentive scheme for electric vehicles will be liable to pay penalties in event of non-adherence with laid-down localisation norms, a senior official told ET.
Companies certifying vehicles for subsidies under Faster Adoption and Manufacturing of Electric Vehicles (FAME 3) — scheduled to be announced in the upcoming budget — will have to undergo a techno-commercial audit twice a year to ascertain they are meeting localisation guidelines.
In the event of irregularities, manufacturers would have to return claimed subsidies with interest at a rate 3% higher than MCLR (marginal cost of funds-based lending rate) in penalties, the official said.
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This will be the first time EV makers are penalised for not meeting declared localisation criteria under the scheme since the government launched FAME in 2015.
Earlier iterations of the scheme focused on phased manufacturing programme (PMP) to gradually increase localised content in domestic electric vehicles. But the new EV subsidy programme being readied is for companies that already have local manufacturing or sourcing in place. The decision to impose penalties is also aimed at preventing recurrence of controversies that riddled implementation of the ₹10,000-crore FAME 2, in which more than half a dozen companies including Hero Electric and Okinawa Autotech were found to be wrongfully claiming subsidies without meeting localisation guidelines.
Committee being set up
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