EVs will become inevitable whether you like it or not: NITI's Amitabh Kant

Develop local supply chain base for EVs and parts, reduce import from China

Amitabh Kant CEO NITI Ayog nudged established automakers to move forward with their EV (electric vehicle) plans and warned that in the absence of that the incumbents can cede ground to the startups as the latter are growing exponentially. The Niti Ayog head also emphasised on the need to adopt an indigenous route for EVs, develop a robust supply chain and reduce dependence on imports from China.

“The domestic manufacturers must realise that we are in the midst of a biggest transition. The EV will become inevitable whether you like it or not, he said during his virtual address to the auto industry leaders at the 61st annual conference of Auto Component Manufacturers Association (ACMA). The Indian manufacturers should read the writing on the wall and exploit the opportunity to lead the disruptive change and aim for a strategic role in the global value chain," he said.  

According to Kant, is imperative for the country to “indigenise the manufacturing of EVs and its parts and promote mass adoption.” He cautioned that the EV industry should not adopt the route followed by the solar power sector. “Don’t want to be a major importer like we are in solar,” he said, pointing out that it’s an opportunity for India’s component industry to de-risk, diversify their portfolio and become part of a global supply chain.

His comments on start-ups come amid a flurry of e-scooter launches by them including Ola Electric. A persistent increase in petrol prices and a policy push by the centre and states has helped manufacturers of e-scooters launch them at a price which is only marginally higher to comparable internal combustion engine (ICE) powered models. A higher demand has prompted e-scooter makers to create large capacities in the world's largest two-wheeler market.

While electrification in the two-wheeler and shared mobility segments will be rapid, personal car buyers will have to wait till price parity between ICE cars and e-cars is arrived at. “I have maintained that electrification can only happen on a large scale in India, only when the customers find EVs a lot more attractive than ICE. The customer has to accept this. It cannot be adopted very fast, given the state of infrastructure in India, this process will take some time,” said RC Bhargava, chairman at car market leader, Maruti Suzuki India.

Kant believes, India's low car penetration--21 per 1,000 people, as against United States’ 960 per 1,000, and Europe’s 850 per 1,000, will make the transition from ICE to EVs smoother as the country will not have any “legacy issues.” As a signatory to the Paris Agreement on Climate Change, India is committed to reduce carbon emission by 25 per cent by 2030. EVs are one way India can achieve this target. While one will see contours of mobility evolve continuously, one thing is very clear that the world will move to shared, connected and electric, said Kant.

Meanwhile, the Niti Ayog chief also nudged the automotive industry representatives to expedite the localization of low value, high volume parts pointing out that some of the critical components and aggregates like a catalytic converter, electronic fuel injector  that are intrinsic to Bharat Stage VI emission compliant vehicles continue to be imported and should be localised.

Kenichi Ayukawa, President, Society of Indian Automobile Manufacturers (Siam) and MD & CEO, Maruti Suzuki India said that both Acma and Siam have “jointly developed a localization roadmap for the automobile industry. This roadmap details key components across segments and the corresponding opportunity for localization.”

In line with the decline in vehicle sales of 13.6 per cent, India’s auto component industry saw a fall  of 3 per cent in revenue in FY21, said Deepak Jain, president. It is now “witnessing a gradual resurgence of demand for vehicles, and I am hopeful that we will be able to ensure business continuity and return to pre-covid levels of performance, sooner rather than later,” said Jain.

The domestic auto component industry witnessed smart recovery during the quarter ended June 2021 driven by strong exports and revival of domestic demand in June 2021. Icra’s sample of 50 auto component suppliers witnessed a strong revenue growth of 140 per cent YoY, albeit on a low base of Q1 FY2021, it said in a statement on Thursday.