EV subsidies flawed and unfeasible, says Bajaj Auto MD Rajiv Bajaj

'Unimaginative govts throw money at manufacturers'

Bajaj Auto Managing Director Rajiv Bajaj tells Surajeet Das Gupta in an e-mail interview that the FAME II subsidy is a flawed strategy. Edited excerpts:

Do you think the FAME subsidy was needed at all for revving up the electric two-wheeler industry?

In my 30+ years at Bajaj I've witnessed engine technology change from the simple 2-stroke single cylinder carburetted air-cooled era to sophisticated 4- stroke fuel-injected, multi-valve, multi-spark, multi-cylinder, liquid-cooled engines. I’ve simultaneously witnessed emission regulations go from non- existent to BS6 which is on a par with Euro 5, the world’s best.

Was there any government subsidy for this? Not a rupee. It happened basis sound manufacturer strategy driven by the desire to be world-class global brands.

Why then was this feeling that EV subsidies are inevitable? And why  scale back now?

A: It’s a flawed approach because it is eventually unsustainable and the recent announcement to scale back FAME 2 prematurely proves it. It is a flawed approach because it masks reality, breeds complacency, disincentivises innovation and motivates corruption. The recent announcements of allegations against manufacturers prove this too.

It’s a flawed approach also because it subsidises the rich who buy expensive EVs but not the Covid-impacted aam aadmi who cannot afford an entry-level ICE vehicle, and hence it is not just politically but also morally questionable.

Justifying this flawed approach on the basis of the argument that other governments do it too should remind us of Hans Christian Andersen’s fable The Emperor's New Clothes.

Unimaginative governments the world over throw money at manufacturers because it’s the easiest thing to do. A more astute approach would have been to instead to densly invest these   thousands of crores in select top cities towards creating the right infrastructure for EVs, such as special lanes, charging stations, swapping facilities, battery disposal and so on.

That would have given customers the confidence to move to EVs and manufacturers would have had little choice but to follow customers.

Instead, the tail has wagged the dog and the baby has been thrown out with the bathwater.