This comes after a spate of enforcement actions in 2023-24, to the tune of ₹297 crore, when several manufacturers were issued notices and asked to refund subsidies for failing to meet localisation and eligibility norms.

FAME-II was a Central government scheme with an outlay of ₹10,000 crore to increase EV adoption for a period of three years, commencing from 1 April 2019 to March 2024.

Binding Integrity Pact 

A key change is the introduction of a binding integrity pact that EV makers must sign at the time of applying for subsidies. Under this, all applicants will have to sign a contract while applying under the scheme, which states that any violation of norms will attract penalties, and the accused will have to surrender the subsidy to the government.

While earlier policy guidelines required compliance, they did not explicitly spell out penalties for any violations. The new pact closes that gap by making it contractually clear that any misuse or misrepresentation will trigger a full refund of subsidies, along with the possibility of further action

— Hanif Qureshi, Additional Secretary, Ministry of Heavy Industry

Recovery was enforced even earlier, but the absence of an explicit clause diluted deterrence. “This time, the consequence is built into the agreement itself,” he added.

In 2024, many small and large EV manufacturers, including Okaya EV, Kinetic Green Energy, Ather, and TVS, came under government scrutiny for violating FAME-II subsidy norms. Although Okaya EV and Kinetic Green Energy received a clean chit.

The Secretariat reached out to Ather and Kinetic Green Energy, and TVS, who declined to comment on the matter.  

Annual Audit

The government has also moved to conduct annual audits of manufacturing plants, marking a shift from the earlier system of one-time certification.

These audits will be carried out by existing testing agencies, including the International Centre for Automotive Technology (iCAT), Automotive Research Association of India (ARAI), Global Automotive Research Centre and National Automotive Test Tracks (GARC), and National Automotive Test Tracks (NATRAX).

Each manufacturer will be audited annually by the same agency that certified its vehicles, with checks continuing through the policy period, which will curb deviations that may arise after initial approvals.

Qureshi also said that the Industrial Finance Corporation of India has been hired as the Project Management Agency (PMA) to manage the centralised claims portal.

“All subsidy applications are now processed digitally, allowing real-time tracking and creating an auditable trail of approvals and disbursals. The system is designed to reduce manual handling and flag inconsistencies early,” he added.

Biometric Checks

On the consumer verification front, for claiming subsidies under the scheme, OTP-based authentication has been scrapped as it was vulnerable to misuse. The government has now shifted to biometric verification, including face recognition, for seeking such benefits. The system has been integrated with the Unique Identification Authority of India (UIDAI)’s Aadhaar Data Vault, enabling secure identity validation at the point of sale.

The industry has welcomed the introduction of internal audits that have been introduced to check the credibility of all subsidy claims. 

Manufacturers have improved their internal regulatory system, including an efficient documentation system, and systematic internal audits have been introduced

— Shivam Chawla, an automotive consultant

The tighter compliance highlights a clear shift in the government’s approach from action taken after misuse of subsidy to preventive measures to avoid any leakages. The Central government has taken a step to plug structural gaps that allowed misuse to go undetected by embedding a binding integrity pact, annual audits, and digitising the subsidy pipeline.

EV Numbers

India has set an ambitious target to elevate EV sales to 30% of private cars, 70% of commercial vehicles, 40% of buses, and 80% of two- and three-wheelers by 2030.

According to the NITI Aayog report, Unlocking A US$200 Billion Opportunity: Electric Vehicles In India, the country has progressed to only about 7.6% of the sales in 2024 being electric, which is far behind its target of 30% by 2030. 

According to the Vahan Dashboard, as of March 2026, total EV registration stood at 1,94,520 as compared to 193,829 units in February.