FAME-II Crackdown Drives Small EV Makers to Brink of Collapse

Quick Summary

• Several smaller electric two-wheeler manufacturers have seen a collapse in sales following penalties for violating FAME-II subsidy norms. Companies like Okinawa Autotech and Ampere Vehicles reported important drops in sales, with smaller players such as AMO Mobility and Benling India nearly disappearing from the market.
• Hero Electric is undergoing insolvency proceedings with bids invited for its resolution. The company’s annual registrations dropped from 29,965 units in 2023 to just 382 units in 2025 so far.
• Regulatory action included suspending subsidies worth Rs 469 crore after detailed audits revealed non-compliance with localisation norms. Some firms returned a total of Rs 170 crore, while others contested the claims legally.
• Investigations by SFIO alleged fraudulent availing of subsidies worth Rs 297 crore, further deepening sector challenges.
• Larger companies like TVS Motor, Bajaj Auto, Ola Electric, and Ather Energy have gained market share due to compliance and strong supply chain networks. New entrants have also diversified the market landscape.
• The government plans to introduce FAME-III to ensure stricter compliance and support cleaner mobility initiatives.

Indian Opinion Analysis

The crackdown on electric two-wheeler makers over violations of localisation norms under FAME-II highlights critical governance issues tied to subsidy frameworks. While regulatory enforcement ensures fairness and adherence to policy goals like promoting domestic manufacturing, sudden punitive measures may destabilize affected sectors temporarily.

For India’s EV ecosystem, this reshuffle demonstrates both risks associated with non-compliance-such as financial clawbacks-and opportunities for compliant players like TVS Motor and Ather Energy to scale rapidly amid reduced competition.Consumer resilience will depend on balancing affordability post-subsidy removals.

The upcoming FAME-III policy presents a chance for fine-tuning long-term strategies prioritizing sustainable growth alongside effective regulation enforcement-a necessary step toward achieving decarbonization goals without unintended setbacks within emerging industries.Read More