Hero Electric aims to resolve Rs 140 crore penalty imposed by MHI

Hero Electric has urged the government to resolve the ongoing dispute concerning the Rs 140 crore penalty imposed by the Ministry of Heavy Industries (MHI). The MHI had issued notices to seven companies, including Hero Electric, citing alleged violations of the Phased Manufacturing Programme (PMP) guidelines and other regulatory issues.

Hero Electric, a prominent player in the electric two-wheeler sector, has communicated to the ministry its desire for a case-specific resolution. The company highlights the government's approach to settling penalties on a case-by-case basis for original equipment manufacturers (OEMs), emphasizing its willingness to reach a similar settlement based on the merits of its case.

Expressing concerns over the prolonged delay in settling the matter, Hero Electric points out the lack of a defined template for penalties or settlements from the government. The company has requested a meeting with MHI officials to discuss and resolve the penalty in accordance with the ministry's assessment of the alleged violation.

Despite making representations for nearly 22 months, Hero Electric asserts that its case remains unsettled without a clear reason. The company had previously proposed a settlement formula in September 2023, offering to pay Rs 8 crore for a specific period, but the government rejected this offer. Hero Electric, in turn, rejected the demand for a refund of Rs 140 crore, arguing that it does not apply to the company.

The company maintains that it operated under certifications provided by the MHI during the period under scrutiny, distinguishing its situation from that of other companies. A top MHI official has acknowledged receiving Hero Electric's communication and expressed a desire for a settlement. However, conflicting statements have emerged, with a Hero Electric spokesperson stating that there has been no recent communication with the MHI.

This development follows closely on the heels of Greaves Electric Mobility's refund of the Rs 124 crore subsidy in October 2023, responding to a government demand notice. Greaves Electric Mobility emphasized its commitment to consumer interests and a desire to avoid prolonged litigation while denying any admission of guilt.

In April 2023, the government issued notices to over seven companies, collectively demanding the return of Rs 469 crore for alleged violations under localization rules. Apart from Hero Electric and Greaves Electric Mobility, other companies involved included Okinawa, Benling India, Revolt, Amo Mobility, and Lohia Auto. Revolt, among the listed companies, has already paid back Rs 50.02 crore to settle the issue.

The government has clarified that companies settling their dues will be eligible for subsidies. Hero Electric, however, continues to emphasize in recent communications that it faces no charges of under-invoicing, overcharging customers, using non-compliant parts, or misappropriation of subsidies, as certified by the ministry itself for the period of 2019–21.