CAG flags Rs 468 crore in FAME incentives to EV makers violating localisation norms
An audit by the Comptroller and Auditor General (CAG) found that five original equipment manufacturers (OEMs) violated localisation norms prescribed under the Phased Manufacturing Programme (PMP) of the FAME scheme, but were still paid demand incentives totalling Rs 467.96 crore
Two of the five manufacturers have since returned Rs 190.90 crore with interest; recovery from the remaining three is ongoing
The audit also flagged Rs 6.18 crore recovered from a manufacturer for selling 894 electric vehicles after its eligibility certificate had expired, and Rs 1.65 crore in excess payments to two manufacturers for electric three-wheelers
Significant charging infrastructure shortfalls were reported: only 148 of 2,877 approved charging stations under FAME-II were commissioned, and none of the 8,412 stations awarded to oil marketing companies met the prescribed deadline
Monitoring gaps were identified in the scheme's incentive-disbursement portal, including the absence of a central server to track deployed electric buses despite a committed deadline
FAME Scheme and the Phased Manufacturing Programme (PMP)
The Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles (FAME) scheme, launched by the Ministry of Heavy Industries in 2015, is India's flagship demand-incentive programme for electric vehicle adoption. To ensure incentives support domestic manufacturing rather than assembly of imported kits, FAME-II tied eligibility to the Phased Manufacturing Programme, which mandates that specified vehicle components be sourced domestically within fixed deadlines.
Key Details
- FAME-I (2015–2019): outlay of Rs 895 crore
- FAME-II (2019, extended to 2024): outlay of Rs 11,500 crore, with greater focus on electric buses, two-wheelers, three-wheelers, and charging infrastructure
- PMP under FAME-II listed 18 vehicle parts/components (such as control units, chargers, AC units) that OEMs could import only until fixed deadlines, after which incentive eligibility required local sourcing
- A further tightening — cutting PMP-listed components from 18 to 12 — is reportedly under consideration for FAME-III
The CAG audit found that OEMs sourcing components that should have been localised under the PMP schedule were nonetheless certified eligible and paid incentives, indicating a breakdown in the certification and monitoring process meant to enforce the localisation condition.
CAG — Constitutional Audit Mechanism (Articles 148–151)
The Comptroller and Auditor General of India is a constitutional authority under Article 148, established to audit the receipts and expenditure of the Union and state governments. While Article 148 creates the office, the CAG's substantive audit powers derive from Article 149, operationalised through the CAG's (Duties, Powers and Conditions of Service) Act, 1971.
Key Details
- Appointed by the President by warrant; removable only in the manner and on the grounds applicable to a Supreme Court judge (Article 148)
- Term: 6 years or until age 65, whichever is earlier
- Audit jurisdiction: the Consolidated Fund of India and of each state, the Contingency Fund, the Public Accounts, and bodies substantially financed by government grants
- Audit reports on Union accounts are submitted to the President and laid before Parliament (Article 151); state audit reports go to the Governor and the state legislature
This CAG audit of the FAME scheme's incentive disbursement is an example of performance/compliance audit of a centrally sponsored subsidy scheme, exercising the CAG's constitutional mandate to scrutinise how public money sanctioned by Parliament was actually spent.
Public Accounts Committee — Parliamentary Scrutiny of CAG Findings
The Public Accounts Committee (PAC) is the parliamentary committee responsible for examining CAG reports on the accounts of the Union government, probing irregularities in expenditure, and reporting back to Parliament.
Key Details
- Composition: 22 members — 15 from the Lok Sabha and 7 from the Rajya Sabha, elected by proportional representation
- By convention since 1967, the PAC Chairperson is drawn from the Opposition; ministers cannot be members
- Member tenure: one year; the Committee can summon officials but its findings are advisory, not binding, and it does not question the merits of policy — only regularity, legality, and efficiency of expenditure
- PAC operates under Rule 308 of the Lok Sabha Rules of Procedure
Once tabled in Parliament, this CAG report on FAME incentive irregularities is expected to come up before the PAC, which can question the Ministry of Heavy Industries on why incentives were disbursed despite localisation violations and on the recovery status.
- Total flagged incentive amount for localisation violations: Rs 467.96 crore, involving 5 OEMs
- Amount already recovered (with interest) from 2 OEMs: Rs 190.90 crore
- Additional irregularities: Rs 6.18 crore (expired eligibility certificates, 894 vehicles); Rs 1.65 crore (excess payment, 5,198 e-three-wheelers)
- Charging infrastructure shortfall: only 148 of 2,877 approved stations commissioned under FAME-II
- FAME-I outlay: Rs 895 crore (2015–2019); FAME-II outlay: Rs 11,500 crore (2019–2024)
- PMP under FAME-II: 18 listed components requiring phased localisation
- CAG's constitutional basis: Article 148 (office), Article 149 (duties/powers), Article 151 (reports to legislature)
- PAC composition: 22 members (15 Lok Sabha + 7 Rajya Sabha); Chairperson conventionally from the Opposition