Auto sector welcomes PM Modi's assurance on internal combustion engine cars

The assurance by Prime Minister Narendra Modi that internal combustion engine (ICE)-powered vehicles will stay, as India’s market is big enough to accommodate both these and cleaner technologies like  electric vehicles (EVs), is big relief for automobile makers. 

The assurance was given in a recent interview to The Economic Times. 

In separate statements, top officials from various companies said the clarification puts to rest the speculation regarding the fate of ICE. This would help companies take a more informed decision regarding future investment and to secure jobs.  

Venu Srinivasan, chairman, TVS Group, said the clarification was “a strong step to encourage investment and employment in the automotive sector”. 

A technology-agnostic approach that encourages all options is very important for a developing country like India, dependent on fossil fuel-based sources for much of its power, he added. 

Rajiv Bajaj, managing director also welcomed the statement. “On this basis, India can continue to strengthen its dominant global position in the world of ICE two- and three-wheelers while simultaneously leveraging the skills and cost structure that accrue from it towards the purpose of building a promising future for EVs too.” 

India’s automobile industry is facing one of the most prolonged slowdowns in two decades. Sales have been in a slow lane for a year. On Tuesday, the Society of Indian Automobile Manufacturers (Siam) said it feared steeper production cuts and job losses in the absence of government incentives. Sales across all segments plunged to a two-decade low in July. 

Rajan Wadhera, president of Siam, said:  “The assurance (by the PM) is completely in line with Siam’s recommendations that all relevant technologies should co-exist in the journey towards sustainable mobility.”

In a Twitter post on Tuesday, Anand Mahindra, chairman of the Mahindra Group, said: “The message is loud and clear. The government has no intent to orphan the conventional, ICE-based automotive eco-system.”

The PM had said, “There is no need to speculate about the growth of either of the two. We are in a unique situation where both ICE and EV-based automobiles can co-exist, co-create and learn from each other.

This was after a recommendation by an inter-ministerial panel comprising the ministries of heavy industry, power and road transport, and the NITI Aayog, to replace ICE-powered two-wheelers and three-wheelers by 2023 and 2025, respectively. The proposal had met with strong opposition from automobile companies, saying the move "was rushed and not thought through".

Subsequently, the policy makers had softened their stance on an e-mobility roadmap and a calibrated approach is favoured, without phasing out ICE vehicles soon. The policy makers are also awaiting a study by The Boston Consulting Group, engaged by Siam.