'Payment security mechanism, subsidies to help electric mobility growth'

A well defined payment security mechanism for long-term contracts would help support large-scale rollout of electric buses in the country, according to Ashok Leyland Chairman Dheeraj Hinduja.

In an interaction with PTI, he also emphasised on the importance of subsidies in faster adoption of electric mobility in India.

"So I would say two areas -- one, the subsidies or whatever benefits that the government can consider for promoting electric vehicles is of course welcome, and then some type of payment security mechanisms are also required. It would help the industry to grow at a faster pace," Hinduja said.

He was replying to a query to list initiatives which could aid in the growth of electric vehicles in the country. Hinduja said the government is already looking into some form of security of its payment structure.

"When you're looking at these GCC (Gross Cost Contracting) contracts for 10-12 years, the OEMs do want some security of how to ensure that the payments will happen during this long duration of time," he noted.

A payment security mechanism is essentially a payment security fund that provides interest-free capital in case of default in payments. In the case of electric buses, the onus of unhampered payments to the service provider lies on the state transport undertakings (STUs).

Many of the STUs remain in bad shape financially. Electric bus makers are, therefore, asking the government to set up such a security fund something which already exists in the power sector.

Hinduja noted that overall the government has really been doing a very good job in terms of supporting the requirements for cleaner fuels and cleaning up the pollution within the cities.

"They have provided subsidies for the production of electric vehicles as well...So a lot of private customers who have their commitments of net zero, they are purchasing vehicles directly irrespective of any subsidies," he said.

In the case of buses and light commercial vehicles, it is dependent on government support in terms of subsidies, Hinduja said.

"Wherever there is support from the government , there is clear pick-up in the demand," he noted.

He further said: "When it comes to a very large uptake, I think that might still be some time away. But at least for major city requirements, such as for buses, light vehicles, I do believe that the trend is in the right direction."

There is going to be a period of time when electric and other alternative fuels will co-exist with diesel, Hinduja said.

Ashok Leyand is the country's second-largest commercial vehicle maker.