Hero Electric: No Subsidy Recovery Notice Received; Looking Forward To A Resolution

Hero Electric CEO Sohinder Gill said that the company is looking for a speedy resolution with Rs 500 crore in subsidies withheld by the government.

By Carandbike Team


01-May-23 02:57 PM IST



  • Hero Electric Says it has not received any notice for recovery for FAME II subsidies
  • Company says over Rs 500 crore in subsidies currently withheld by government
  • Company CEO says localisation of quality components cannot come with deadline-driven penalties

Following a recent report that the Government could ask Hero Electric to return all subsidies used under the FAME II scheme, the company has now released a statement. The electric two-wheeler manufacturer clarified that no such recovery notice had been received by the brand though the company was looking forward to a resolution into the matter.


The company said that should it receive such a notice it would be “happy” to respond as it would hopefully open the doors for discussions and a resolution.


Also read: Government Could Seek To Recover FAME II Subsidies From Hero Electric, Okinawa: Report

Hero Electric CEO Sohinder Gill


“We await any formal communication from MHI (Ministry of Heavy Industires) towards quickly resolving the subsidy deadlock, as this could be the first step to help us to recover the Rs. 500 Cr held up with the Department as unpaid subsidy quickly,” said Sohinder Gill, CEO, Hero Electric.


“Earlier the Department was cognizant 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,” Gill added


Also read: Hero Electrics’ Sales Reach 1 Lakh Units For The Second Consecutive Year In FY2023


Gill said that a shortfall in localisation in the final product should be treated as a logistical issue rather than wilful deceit by a company.


Comment on the news reports, Gill said that the reports were a “last-ditch attempt to derail” the company in a bid to knock displace it from its position as a market leader in the electric two-wheeler market. Hero Electric is currently one of the largest e-scooter manufacturers in the country.


Gill said that while the call to use locally sourced components under the FAME II scheme was a step in the right direction, “a shortfall of 5% or 7% or 10% in the final product should not be read as a willful default, but a logistical crunch.” He added that developing high-quality components locally was a process and a deadline-driven penalty would not be the right step citing the dangers of improper manufacturing of lithium-ion batteries which could “potentially became an explosive bomb if not designed and manufactured under the highest standards.”


In the last year, the electric two-wheeler industry in India has seen a spate of battery-related fires with multiple brands issuing recalls in a bid to rectify problems.


In 2022 the Ministry of Heavy Industries (MHI) launched investigations into 13 electric vehicle companies following allegations of violation of norms under the FAME II subsidy scheme. Aside from the investigation the MHI also commenced withholding subsidies to the companies which as per the latest reports sit at over Rs 1,400 crore. Recent reports said that an investigation into Hero Electric and Okinawa had discovered that both manufacturers’ models did not meet the localisation criteria.

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