EV brands to ask 2.5 lakh customers to refund FAME II subsidy amount

In what will surely be a highly controversial move to stay afloat, several electric two-wheeler companies have plans to authorise their dealers to request about 2.5 lakh customers to refund money for a product sold to them at a lower price. The process will be carried out through a public notice that is likely to be issued this week.

Hero Electric, Ampere, Revolt, Benling and Amo Mobility are signatories of the public notice to be issued by the Society of Manufacturers for Electric Vehicles (SMEV). They have sought a refund from customers who bought their vehicles between January 2020 and September 2022.

Our sister publication Autocar Professional is in possession of a copy of the public notice which states, “Customers of e-scooters are hereby notified that the Ministry of Heavy Industries has decided that certification of electric scooters of these brands that were sold during January 2020 and September 2022, and which were subsidised under the FAME II scheme, is being revoked due to technical reasons with retrospective effect.”

Experts say that it is unlikely that any customer would volunteer to refund money to electric vehicle makers. Further, dealers calling customers and asking for money will certainly impact the sentiment around EVs.

However, if these companies are able to recover this money, the amount will be paid to the government towards the penalty levied against them, the SMEV notice says. “Customers must cooperate with the dealerships because they will be contacting them to refund the subsidies so that they can be returned to the Ministry of Heavy Industries,” the public notice goes on to say.

This public notice is a follow-up action to the decision taken by SMEV on July 29, 2023, where only three OEMs – Hero Electric, Benling and Amo Mobility – had consented to this exercise. The SMEV had proposed that since in this case, OEMs have passed on subsidies, which subsequently the Ministry of Heavy Industries (MHI) has ruled as unpayable to OEMs, they be allowed to recover these from customers and pass it back to the MHI, thus annulling the account.

SMEV questions the legal standing behind MHI’s move

Pertaining to the government's order to refund subsidies from 2019 to 2022, the SMEV has sought clarification on the basis of the refund request in a separate letter it sent to the secretary of the Ministry of Heavy Industries. The SMEV asked, "If the subsidy validation process was conducted correctly and in accordance with the established procedures, could you please clarify the legal and regulatory provisions that justify your request for subsidy refunds from the OEMs?"

On the specific issue of the impact on the end customers, the SMEV asked if the subsidies were disbursed to the end consumers by the vehicle makers and given that the reimbursement process presumably confirmed the proper allocation of these subsidies. "We are curious to understand the rationale behind seeking refunds from the OEMs rather than from the end customers who directly benefited from the subsidies," the association questioned.

The association alleges that the Ministry of Heavy Industries' claim for subsidy refunds lacks a valid basis and any actions taken by the MHI in this regard are contrary to established norms, practices, and policy rules.

These actions are unlikely to withstand legal scrutiny

“SMEV expresses understanding for OEMs that may feel pressured to comply with this irregularity. We believe that this situation may eventually create embarrassment for the Ministry and may eventually be rectified. However, if any OEM has engaged in misrepresentation or misappropriation and acknowledges it, as was the case with four OEMs previously, SMEV refrains from commenting, and such OEMs may pursue settlements as they see fit,” the association claimed in a statement. If this notice is indeed issued, it remains to be seen how these companies intend to retrieve the subsidy amount from their customers and what the legal standing in this scenario will be. 

from Autocar India https://ift.tt/1LZMyTY