Waiting to resolve subsidy deadlock, recover Rs 500 cr: Hero Electric CEO

Hero Electric said on Sunday that it is awaiting an official communication from the Ministry of Heavy Industries in order to quickly resolve the subsidy issue, which could be the first step to help the EV company quickly recover the Rs 500 crore it has held with management as unpaid subsidies.

There was news in the media that Hero Electric might be asked to reinstate support.

“In our recent contacts with the department, we have learned of the department’s efforts to find a solution in line with due process at the ministry level and we are confident that a workable solution is just around the corner,” Sohinder Gill, CEO of Hero Electric, said in a statement.

Last year, an investigation was launched into the implementation of the Rs 10,000 crore FAME II scheme after allegations of bogus localization claims and incorrect subsidy claims by 12 two-wheel electric makers.

Support for the FAME II scheme was intended to incentivize electric vehicle manufacturers to use more locally produced parts.

Gill said Hero Electric has followed the CMVR (Central Vehicle Rules) and certification process to manufacture and sell its full range of E bikes for the past 15 years.

“Another fact to bear in mind is the true intent of the FAME Guidelines 2. Localization to a 50 percent value is a guideline. However, a 5, 7, or 10 percent shortfall in the final product should not be read as willful default.” But it is a logistical crisis.

Earlier, “Management knew about the restrictions and continued to offer the extensions, but after the infamous anonymous emails, they responded suddenly and without warning, causing a major financial imbalance on the books of most OEMs,” he added.

The 2019-21 mass-manufacturing electric vehicle market leaders were the hardest hit due to the non-existent supply chain hit by Covid for two consecutive years in 2020 and 2021.

“Late entrants such as OLA, Bajaj, TVS, Kinetic and Okaya benefited thanks to supply chains starting to take off in small numbers,” Gill said.

Most of the OEMs now get supplies from India’s leading batteries, motors, controllers and other component suppliers and hence, almost all players have a continuous supply of high quality local components which was not the case before 2022.

“The issue that needs to be resolved therefore relates to the 2 to 3 years starting in 2019 that had no supply chain and also suffered a period of Covid blackout from whatever small scale Indian components were trying to do,” the CEO of Hero Electric stressed.

Reports last week claimed that the government was likely to issue recovery notices to Hero Electric and Okinawa, after an investigation found they had breached provisions of the FAME II plan.

– Jans

na / svn /

(Only the title and image for this report may have been reworked by the Business Standard staff; the rest of the content is generated automatically from a shared feed.)