Organised e-bike makers to eat into traders' market share

As electric bike makers across the country are confident that sales of e-bikes could almost double in the coming months, thanks to the recent subsidy scheme for e-vehicles announced by the Centre, players feel that this will eventually help organised sector sales eating into that of the unorganised traders of e-bikes.

The Ministry of New and Renewable Energy (MNRE), Government of India has announced the much awaited incentive scheme for electric vehicles in India in November by which the manufacturers will receive financial incentive for each vehicle sold in India. The scheme entails incentives up to 20 per cent on the ex-factory prices of the vehicles, with a cap of Rs 4,000 for low speed electric two-wheelers and Rs 5,000 for high speed e-bikes. The ministry has, however, put a cap on the number of vehicles eligible for the subsidy during the current and the upcoming fiscal. For the last four months of the financial year 2010-11, 20,000 low speed and 10,000 high speed e-bikes would be able to take advantage of the scheme, and for the next fiscal the numbers would rise to 80,000 units of low speed bikes and 20,000 units of high speed bikes.

Currently, the size of the e-bike industry in the country is around 85,000 units per year. This includes around 50,000 units sold by the organised sector players like Hero Electric, Electrotherm, Ajanta Group etc, and the rest belong to the smaller traders. "The MNRE has been careful to specify that manufacturers would have to register with the Society of Manufacturers of Electric Vehicles (SMEV) to avail the scheme. Registration would be provided on meeting eligibility norms, which include having 30 per cent indigenous content in the vehicles sold, they should be significantly present in the retail side of the industry and they should be able to provide after sales service through its outlets and a multi-point check system should be maintained to assess the real retail sale," said Sohinder Gill, director, SMEV, and also the CEO of Hero Electric.

He added that this would limit the benefits of the scheme to only real Indian manufacturers and leave out those who trade e-bikes. Moreover, as manufacturers will now pass on the benefits of the subsidy to the consumers, the price difference between branded products and the unorganised sector products would significantly come down, thus boosting the sales of branded players. Gill said that the monthly sales of e-bikes from organised players should double in the coming one or two months. Another major player in the electric two wheeler industry, Gujarat based Electrotherm too said that they expected sales to double to almost 5,000 to 6,000 units per month. "We currently sell around 2,500 to 3,000 e-bikes per month, and the MNRE scheme will give a huge boost to our sales, almost doubling it," said Shailesh Bhandari, managing director, Electrotherm.

Even ailing e-bike manufacturing units like the Ajanta Manufacturing Group that makes the Oreva e-bikes feel that this could immediately increase sales of their products. "We currently manage to sell only 400 to 600 units per month, though we have a manufacturing capacity of 15,000 units per month. Now we see a chance to more than double our sales," said an upbeat Jaisukh Patel, director, Ajanta Manufacturing. He added that while their bikes are already competitively priced at Rs 20,000-22,000, this would further enable them to bring down prices at a more affordable level.

Sources in the industry informed that the ministry is keen to monitor the initial response to the scheme, and is open to revise the cap on the number of vehicles that can avail the subsidy. "In all, around 1 lakh e-bikes can avail the scheme in 2010-11. But, if the ministry sees higher demand, it is open to increase that number," the source added.