SMEV writes to MHI seeking approval to claim subsidies from customers

Since the government has asked them to return wrongly claimed subsidies, the SMEV wishes to recover this amount from the customer.

Published On Jul 29, 2023 10:13:00 AM

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FAME subsidy recovery from customers of electric scooters, bikes.

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In a bizarre move, a clutch of electric vehicle makers – Hero Electric, Benling and Ammo Mobility – has sought the Ministry of Heavy Industries' approval to approach the customer to refund money for a product sold to them at a lower price. The proposal draws upon an earlier precedent the MHI set regarding four OEMs who were accused of overcharging customers, and in that case, the Centre ruled that the companies must return the overcharged sums to their customers.

Over seven enterprises have been found violating the Phased Manufacturing Programme (PMP) norms that require 50 percent of manufacturing to be done with locally sourced components, and as a result, the MHI imposed a Rs 500 crore penalty on the violators. Stuck between a loss-making operation and outstanding penalty dues to be paid to the government, these EV makers collectively wrote to the Society of Manufacturers of Electric Vehicles to recover money from the customers to stay afloat.

Given the significant penalty levied by the government on these vehicle makers and a significant slowdown in sales over the last 18 months on disrupted sales, the impacted vehicle makers may potentially have to file for bankruptcy, the association feared. SMEV said that post numerous discussions with EV manufacturers, and those who are impacted by MHI’s decisions over the last 18 months, an unusual but obvious possibility for a logical solution has emerged and the OEMs have come around to accepting it as the best under the circumstances.

Sanjay Kaul, the newly appointed chief evangelist of SMEV, has written to Union Minister of Heavy Industries Shri Mahendra Nath Pandey proposing these steps in order to find a prompt resolution to the long-pending issue. SMEV has proposed that since in this case OEMs have passed on subsidies, which subsequently MHI has ruled as unpayable to OEMs, they be allowed to recover these from customers and pass them back to the MHI, annulling the account.

It is to be noted that a few months ago, the department had levied a penalty on some OEMs for overcharging the customers and then asked them to return the amounts to the customers. It is possible that the monies that MHI is demanding from the other set of OEMs for non-compliance, can be similarly recovered by them from the customers and returned to the department, said the letter.

“Since the MHI is suggesting that the subsidies passed on to customers by OEMs now stand cancelled, due to technical reasons decided by MHI subsequently, the customers who have taken such subsidies can be asked to return these to OEMs in all fairness," the letter added.

These vehicle makers have indicated a willingness to share customer data with the department who may be affected by a public announcement. They are also open to taking out a public notice asking such customers to deposit back the excess rebates they had received as subsidies, under the department’s guidance, claimed SMEV.