India is accelerating its way towards an electric fleet market with 2030 set as the likely target for the transition. Industry players, however, want government to think “backward” and scrap old cars before looking “forward” and contemplating addition of new cars.
“When we are driving a car, there are three more mirrors apart from the wind screen… Two on the side and one rear… You need to see backwards as well… You need to scrap old cars…,” Sumit Sawhney, country chief executive officer and managing director, Renault India, told Moneycontrol.
Sawhney said that the government must first ensure scrapping old vehicles to make room for new vehicles, eventually creating demand in the industry.
“Imagine, today, you have 40 million cars of which 15 million were added after 2000… You can scrap today 15 to 20 million cars… Even if you start with five to 10 percent that will be one million… If you scrap it, it will inject fresh demand,” he said.
Ministry of road transport and highways is yet to formulate voluntary vehicle modernisation programme (VVMP) to scrap commercial vehicles older than 10 to 15 years.
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The ministry is expected to hold a “detailed conference” soon with various stakeholders to finalise the policy.
Union minister for road transport, Nitin Gadkari, had previously said that there is an “urgent need” to replace old vehicles as they cause as much as “65 percent” of vehicular pollution. As per government estimates, approximately Rs 5 lakh rupees would be saved on each truck.
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“When I hear the vision and the mission of making India as the biggest hub of electric car, then the words and the acts should match…,” said Sawhney.
He also said that India must adopt China like model to achieve the twin objective of growing industry and addressing environmental concerns. He believed that the border country grew only by scrapping old vehicles thereby infusing fresh demand.
“Indian automotive industry, today, is at 3.3 million (volume per year sold). If you scrap it (old vehicles), it will inject fresh demand… That’s how China has grown. China today is 28 million market,” Sawhney said.
The CEO of India unit, however, opined that it is difficult to have an all e-vehicle fleet by 2030.
“100 percent fleet by 2030 is not possible,” he said, adding “cars are becoming more and more technologically driven… We will have more opportunities coming in cars (but) internal combustion cars will continue (till and after 2030)”.
Union minister for road transport and highways, Nitin Gadkari, has set 2030 as the deadline for having e-fleet in India.
EVs in India, however, hold less than one percent market share of total auto sector, of which 95 percent are low speed scooters.
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There were only 2,000 electric cars in 2016-17 for three million fuel based cars. The number stood at 23,000 for e-scooters against more than 16 million fuel based two-wheelers.
Sawhney’s expectation of the e-vehicle policy also gives the most attention to bringing the scrappage policy as soon as possible coupled with creating the right ecosystem for the industry.
“My expectation is that, clearly, we need to have a long term strategy… We need to make sure that we are not looking short term…,” he said adding “In the policy there could be scrapping, making sure that we are creating infrastructure for battery manufacturing, car manufacturing… we don’t have that right now…”.
“I would say, most important part of the policy is to create the ecosystem and then, obviously, the natural demand will take over”.
Sawhney said that Renault views e-vehicles as the opportunity for India to give a nudge to its auto industry, growing, both, domestically and internationally.
“There is lot of opportunity for electric cars in India and outside of India, in terms of exports… So if we say that we make India as the export hub, we create more opportunities,” he said.
Sawhney also brushed aside any fear regarding overall job loss in the industry.
“If certain jobs will go down, there would be certain new jobs that would come up,” he told, adding that India does have the required skill set to manufacture e-vehicles.
“I think we have enough talent pool… It’s about finding and nurturing the talent,” he said. “Skill is not an issue… Global units are leveraging from India”.