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

Hero Electric on Sunday said that they are awaiting a formal communication from the Ministry of Heavy Industries towards quickly resolving the subsidy deadlock, which could be the first step to help the EV company recover Rs 500 crore held up with the Department as unpaid subsidy quickly.

There has been news in the media about the possibility of Hero Electric being asked to give back the subsidy.

“In our recent exchanges with the Department, we have been made aware of the efforts by the Department to find a solution that passes muster by due process at the ministry level and are confident that a practical solution is round the corner,” Sohinder Gill, CEO, Hero Electric, said in a statement.

Last year, a probe was launched into the implementation of the Rs 10,000-crore FAME II scheme following allegations of fake localisation claims and incorrect subsidy claims by 12 electric two-wheeler makers.

The FAME II scheme’s subsidy was aimed to incentivise EV manufacturers to use more locally produced parts.

Gill said that Hero Electric has followed the entire CMVR (Central Motor Vehicles Rules) and certification process for manufacturing and selling its entire range of E bikes for the last 15 years.

“Another fact that should be considered is the real objective of FAME 2 guidelines. Localisation to the value of 50 per cent is a guiding light. However, a shortfall of 5 or 7 or 10 per cent in the final product should not be read as a willful default, but a logistical crunch,” Gill noted.

Earlier, “the Department was cognisant about the limitations and continued to offer extensions, but after the notorious anonymous emails, it reacted suddenly and without warning, which caused the huge financial imbalance in the books of most OEMs,” he added.

The EV market leaders manufacturing big volumes in the year 2019-21 have been the worst affected because of the non-existing supply chain which was further hit by Covid for two consecutive years in 2020 and 2021.

“Late entrants like OLA, Bajaj, TVS, Kinetic, Okaya benefitted thanks to the supply chain that was beginning to take off in small numbers,” Gill said.