India's Ministry of Corporate Affairs (MCA) has announced an ongoing investigation into three electric vehicle (EV) manufacturers for allegedly availing government subsidies fraudulently.

The total sum in question amounts to approximately Rs2.97bn (about $35m).

The firms under scrutiny, Hero Electric Vehicles, Benling India Energy and Technology, and Okinawa Autotech; they are accused of violating guidelines tied to FAME II.

FAME II was launched in 2019 by India’s Ministry of Heavy Industries (MHI), that aimed to promote local EV manufacturing and drive electrification in India. It is mainly involved in two-wheeler EVs and the associated supply chain for the technologies.

Searches conducted by the Serious Fraud Investigation Office revealed that these companies may have imported restricted parts from China, directly or indirectly, against the scheme's rules.

The MCA has confirmed that an investigation is currently underway.

In its statement, the MCA said: "The three companies, for claiming subsidies, had deceptively shown compliance with the applicable guidelines to the MHI, which was subsequently found to be incorrect and false."

India's e-scooter market, though still small, is rapidly expanding, making up about 5% of total two-wheeler sales in fiscal 2023-2024.

The Government of India has been investigating Hero Electric and Okinawa since last year for allegedly misusing subsidies under the FAME scheme, reported CNBC TV 18.

Following whistleblower complaints, government testing agencies, the Automotive Research Association of India (ARAI) and the International Centre for Automotive Technology (ICAT), conducted probes into these companies.

In addition to Hero Electric and Okinawa, the government is examining potential subsidy misuse by at least 14 other EV manufacturers.

These include Benling, Okaya, Jitendra New EV, Greaves Electric Mobility, Revolt Intellicorp, Kinetic Green Energy, Avon Cycles, Lohia Auto, Thukral Electric, and Victory Electric.