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India’s flagship electric vehicle incentive programme, Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, paid nearly Rs 468 crore to manufacturers that violated localisation norms, even as thousands of approved charging stations were not commissioned on time, a recent Comptroller and Auditor General of India report has found, along with several other irregularities.
The Union Ministry of Heavy Industries launched the first phase of the scheme, known as FAME-I, in April 2015 to promote electric and hybrid vehicles. It was initially given a budget of Rs 795 crore for two years. The scheme was later extended until March 2019, and its budget was increased to Rs 895 crore.
The second phase, FAME-II, was launched for the period from April 2019 to March 2024 with a budget of Rs 10,000 crore, later increased to Rs 11,500 crore.
The scheme was implemented through five components: demand incentives, charging infrastructure, technology platforms for research and development, pilot projects, and information, education and communication.
According to the CAG report, the Demand Incentive Delivery Mechanism portal used under both phases of the scheme had several shortcomings. These included the failure to prepare a detailed project report and the absence of a service-level agreement for portal development. As a result, the contract did not clearly define key deliverables, timelines, testing protocols, data and system integrity requirements, defect management, or change management processes, the audit said.
The portal also lacked end-to-end online claim processing by the ministry and did not have adequate validation controls, the audit found.
In the first phase of the scheme, the ministry approved proposals for 425 electric buses from state transport undertakings and municipal corporations in 10 cities, with subsidy support of Rs 278.42 crore. All the e-buses approved under FAME-I were deployed. In the second phase, 5,195 e-buses had been deployed by December 31, 2025, against the revised target of 6,862 buses, according to the audit.
However, the ministry had not created the central server required to monitor the performance of e-buses. The CAG said this was despite the ministry assuring the Project Implementation and Sanctioning Committee in November 2019 that the central server would be available by December 2020.
The ministry also did not set timelines for testing agencies to complete tests and issue Eligibility Assessment Reports under the FAME India scheme. The audit said the absence of control or oversight over the time taken by testing agencies to complete testing and certification led to significant delays, of up to 497 days, in issuing the reports.
The audit found that five original equipment manufacturers violated localisation rules set under the Phased Manufacturing Programme, but were still granted demand incentives totalling Rs 467.96 crore.
The violations were later identified after the ministry directed testing agencies to carry out detailed record checks, physical inspections of plants and strip-down analysis of vehicles, the report said. Two of the five manufacturers returned the full demand incentives, totalling Rs 190.90 crore, along with interest to the ministry.
The process of recovering demand incentives or deregistering the remaining three manufacturers is under way, according to the report.
The CAG also found violations of scheme guidelines in cases where vehicles were sold after the validity of the FAME Eligibility Assessment Certificate had expired. This led to recovery of Rs 6.18 crore from an original equipment manufacturer in relation to 894 electric vehicles.
In the case of 5,198 electric three-wheelers supplied by two manufacturers, the ministry released demand incentives without limiting the incentives to the amount mentioned in eligibility certificates issued by testing agencies. This resulted in an excess payment of Rs 1.65 crore, the audit said.
The CAG report said there was no roadmap or action plan for creating adequate public charging infrastructure under the first phase of the scheme.
During 2015-19, the Project Implementation and Sanctioning Committee awarded charging infrastructure projects to three agencies, Bharat Heavy Electricals Limited, Rajasthan Electronics and Instruments Limited, and Mahindra Reva, without inviting expressions of interest.
Projects were approved on the basis of proposals received from the implementing agencies, the audit said.
In the case of a project awarded to Rajasthan Electronics and Instruments Limited in January 2019, the audit found that Rs 12.66 crore had been wasted. The 122kV charger and power transformer were not commissioned, the solar plant was not commissioned and unused cables were lying with the installation agency, it said.
Under approved charging infrastructure projects, the ministry had allocated funds to develop central management system software for managing charging stations.
The audit found that the Indian Institute of Technology Madras had developed the central management system in June 2017 using funds released by the ministry under the technology development component. But the ministry had not adopted or commissioned it.
Progress on charging infrastructure remained limited under FAME-II. The Project Implementation and Sanctioning Committee approved 2,877 charging stations across cities, to be set up by 20 agencies. However, only four agencies commissioned a total of 148 charging stations.
No funds were released under the highways and expressways project because little progress had been made in installing and commissioning charging stations, the report said.
The ministry cancelled all 1,576 charging stations approved under this project.
The audit also found that none of the 8,412 charging stations awarded to three oil marketing companies had been commissioned by the deadline of March 31, 2024.
The audit team and officials from implementing agencies jointly inspected 104 charging stations and chargers between February and July 2023, including 25 solar plants installed at such stations.
The inspection found several issues. These included chargers without power supply, chargers removed from installation sites, chargers not available at the site, staff being unaware of the charging process, the charging management system not working, vandalism and encroachment on parking spaces marked for EV charging, faulty chargers, and car chargers installed in spaces meant for two-wheelers.
The CAG report also found limited spending on information, education and communication activities. Of the Rs 48 crore allocated for such activities during the first and second phases of the scheme, the ministry used only Rs 7.52 crore.
The ministry was required to implement a suitable awareness programme to inform consumers and promote the scheme. However, it did not formulate any policy or action plan for this, the audit said.