According to them, at least one such company is in the final stages of filing a petition while several others are likely to follow suit in quick succession, if it is admitted.
The matter pertains to the Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India Phase-II (FAME-II) scheme, which comes with several riders such as localisation of parts used in the vehicles and adhering to certain caps on the retail price of beneficiary models. Under the scheme, manufacturers were expected to discount the prices of the vehicles by the amount of subsidy due and the government would later reimburse this amount to the companies. However, allegations of widespread manipulation by EV makers have been rife, wherein vehicles with largely imported components are said to have been passed off as locally sourced to claim subsidy. Taking note of the issue, the government has withheld the subsidies of around 13 companies totalling Rs 1,100 crore so far. The affected companies include Hero Electric and Okinawa Autotech.
EV makers have argued that the localisation timeline set down by the government was difficult to achieve due to the impact of the Covid-19 pandemic.
“We are contemplating how we can go to court and request for the formation of a high-level committee to analyse the issue,” said Abhishek A Rastogi, founder at Rastogi Chambers, who is representing one such company. Certain parts which were imported for use in the vehicles are not available locally, and hence the government could look at “pragmatically” allowing the import of such parts, Rastogi said.
Industry lobby Society of Manufacturers of Electric Vehicles did not respond to ET’s questions about its members considering legal steps.
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To be sure, the FAME-II scheme came with a detailed phase-wise localisation plan that gave the runway up to two years for localisation of some parts like motors.Another lawyer who has advised companies whose subsidies have been withheld said companies could also argue that there was no mention in the scheme of a minimum amount of value-addition to a part for it to be considered locally sourced. The accused manufacturers had routed imported parts through local vendors who did basic assembly operations.
The companies can argue that the local assembly operation made the part of local origin, the lawyer said, requesting not to be named. “There is no definition of locally sourced parts or a threshold value addition requirement. Even if 1% of assembly happened in India, it can be called a locally sourced part.”
The government has also recently sent notices to some companies like Ather Energy and Ola Electric for separately invoicing the charger and software sold with their two-wheelers to comply with the Rs 1.5 lakh price cap on the retail price of vehicles for availing subsidies.
In this case, it will come down to the interpretation if vehicles are sold with the charger and software in the normal course of action and global precedents will be studied, Rastogi said.