Greaves Cotton Pays INR 124 Crore Penalty To Heavy Industry Ministry

Greaves Cotton has announced that it has paid INR 124 crore penalty to the Ministry of Heavy Industries (MHI) along with the accrued interest. This comes as a response to the letter written to Greaves Cotton by MHI on May 25, proposing to deregister Greaves Cotton from FAME India Scheme Phase II as it failed to adhere to PMP guidelines.

MHI had also directed the company to deposit Rs 124 crore, including incentives claimed under the scheme.

In an official statement, Greaves Cotton said, “Greaves Electric Mobility Private Limited (GEMPL) is a proud Indian company and a leader in India’s rapidly expanding EV sector. GEMPL was one of the first companies to enthusiastically support and deliver on the Government’s localisation vision. Our legacy of over 160 years represents a storied history of creating Indian jobs, supporting local suppliers, and building an inclusive workforce. In light of our commitment to consumer interests, to avoid protracted litigation, and without admitting to any of the allegations, contentions, or statements made in the Notice, GEMPL, on 27th October 2023, has offered to amicably resolve and bring closure to the matter.”

It further stated, “Accordingly, GEMPL refunded to MHI the entire incentive claim of INR 124 crores appx, along with the accrued interest, and without prejudice to our legal rights. GEMPL awaits confirmation from MHI for taking the necessary steps to withdraw the show cause notice and to be back on the portal soon. We are dedicated to resolving this matter in a fair and equitable manner and for the wider interest of our consumers.”

Last year the government cracked down on electric vehicle OEMs following the emails from whistleblowers allegedly stating that some companies were claiming incentives for local manufacturing wrongly since they were using foreign-made parts.

In this email, two companies were mentioned including Hero Electric and Okinawa following which the government suspended subsidies for the two EV makers, and launched an investigation to weed out others indulging in similar practices.

Meanwhile, Society of Manufacturers of Electric Vehicles the SMEV of which Hero Electric is a part of the management committee had released a statement according to which a group of individuals with vested interests were responsible for sending emails aimed at defaming certain EV manufacturers.

The issue around the FAME II came to light in August last year when the Ministry of Heavy Industries started to focus on domestic manufacturing of components used in the making of EVs and domestic value addition.

First, Hero Electric and Okinawa Autotech bore the wrath of government for allegedly flouting minimum localisation norms of the FAME-II scheme. Subsequently, a probe was also started against several other players, including Revolt and Ampere Vehicles. 

Amid all this when the probe was ongoing, other electric vehicle companies including Ola Electric, Ather Energy, TVS, and Hero MotoCorp were alleged to have kept their vehicle prices artificially lower to claim FAME-II subsidies.

Earlier, electric two-wheelers were to get a maximum subsidy of 40 per cent on the total cost of the vehicles under FAME-II if their maximum ex-factory price was INR 1.5 Lakh per unit. However, after finding misappropriation of FAME-II subsidies by EV players, the government recently slashed the incentives to 15 per cent of the ex-factory price of electric two-wheelers from 40 per cent. It also cut the demand incentive to INR 10,000/kWh from INR 15,000/kWh earlier.