Government welcomes FDI in auto sector, including from China, says Hanif Qureshi

Hanif Qureshi is an additional secretary in the heavy industries ministry.

The government is open to foreign direct investment (FDI) from most countries, including China, provided it comes with necessary technology transfer and regulatory clearances, additional secretary in the ministry of heavy industries Hanif Qureshi has told Moneycontrol.

The officer said the localisation requirements under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles-2 programme, better known as FAME2, significantly helped the supply chain grow, reducing imports from China and other countries, he added. Edited excerpts of the interview:

The FAME 2 policy for hybrid and electric vehicles ended in March. What have been the key learnings for the government and how will it impact the future framework?

FAME2 targeted electric two, three and four-wheelers. The industry response was so positive that the targets were exceeded in every category, prompting us to request more funds from the ministry of finance, which were provided and exhausted. The industry's response to electric vehicles has exceeded our expectations.

For FAME3, we have discussed with the industry and stakeholders have provided inputs. Key learnings include the need for more spending on electric buses and charging infrastructure.

The localisation requirements under FAME2 significantly helped the supply-chain grow, reducing imports from China and other countries. This focus on developing local technology and industries will continue.

Under FAME2, the phased manufacturing programme (PMP) allowed initial imports of components but mandated eventual local production or sourcing. This has significantly boosted local industries.

There are expectations that Rs 10,000 crore will be earmarked for FAME3. 

The size of the scheme is still under consideration as we gather views from various quarters.

What is the government’s view on FDI from China in the auto sector?

The government of India encourages FDI from all countries, including China, though countries sharing a land border with India must go through specific approval processes. The government encourages technology sharing, Make-in-India production, and local employment as part of the FDI policy. The government of India has entered into collaborations with various countries through free-trade agreements and joint working groups, enhancing the competitiveness of the Indian automobile sector.

What are the measures being taken to improve EV charging infrastructure?

The government has made the establishment of charging stations an unlicensed activity, encouraging private-sector investment. FAME2 included measures to promote charging infrastructure, and future support will continue. The Bureau of Indian Standards (BIS) has issued standards for charging stations, which are updated periodically. The ministry of power has also issued and is revising guidelines for establishing charging stations.

Industry body the Society of Manufacturers of Electric Vehicles (SMEV) has said some members may file for bankruptcy due to FAME2 penalties. Is there any plan to support these companies?

The objective of FAME2 is to promote the adoption of electric vehicles and increase localisation of components. It is not intended to provide assistance to individual companies.

Any updates on Tesla’s plans for India?

Tesla has not applied for the government's EV promotion scheme. They can apply anytime to take advantage of the scheme’s benefits.