A new Comptroller and Auditor General report has revealed that Rs 468 crore in FAME scheme incentives were paid to five EV manufacturers that failed to meet localization rules. The audit also highlighted major delays in building public charging infrastructure, with fewer than 6% of sanctioned city charging stations becoming operational.
A performance audit report by the Comptroller and Auditor General (CAG) of India, tabled in Parliament on August 12, 2026, has brought the FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) scheme under significant scrutiny. The audit identified systemic irregularities in both Phase I and Phase II of the government’s flagship electric mobility program, raising concerns about subsidy management and infrastructure execution.
At the center of the financial findings is the improper disbursement of approximately Rs 468 crore in demand incentives. According to the audit, five original equipment manufacturers (OEMs) received these funds despite failing to comply with mandatory Phased Manufacturing Programme (PMP) norms. These regulations require companies to maintain a specific level of domestic value addition to qualify for government subsidies. The report noted that while the government has initiated recovery processes, the lapse highlights gaps in the ministry’s internal validation controls for incentive claims.
The audit also pointed to significant execution failures in public charging infrastructure. Out of 2,877 city charging stations sanctioned under the scheme, the report found that only 148 had been commissioned by the implementing agencies. The lack of a clear roadmap and inadequate oversight led to projects being awarded without sufficient due diligence, resulting in funds being tied up in unfinished sites. This slow rollout is a critical bottleneck for the broader EV ecosystem, as insufficient charging access often dampens consumer confidence and adoption rates.
Beyond subsidies and infrastructure, the CAG identified technical shortcomings in the Demand Incentive Delivery Mechanism (DIDM) portal. The report stated that the system lacked proper integration with government vehicle databases, such as Vahan and Sarathi, which weakened the ministry's ability to verify claims in real-time. Furthermore, promises to establish a central server for monitoring the performance of electric buses were not met, limiting the government's ability to track the efficiency and operational status of supported fleets.
For investors and industry stakeholders, these findings suggest a shift toward more rigorous compliance requirements. The government may implement stricter auditing of incentive claims, which could lead to tighter scrutiny of manufacturing processes and potential delays in subsidy disbursements for companies operating in the electric vehicle sector. As the Ministry of Heavy Industries addresses these audit observations, the key monitorable for the sector will be the speed at which charging infrastructure is commissioned and whether future incentive policies introduce more stringent, automated validation mechanisms to prevent similar irregularities.