Kolkata: The pandemic-led disruption in sales and revenues of auto companies at the crucial juncture when they had pumped in huge amounts to migrate to Bharat Stage VI emission technology will impact future investments, including roll-out of electric vehicles, Society of Indian Automobile Manufacturers (SIAM) president Rajan Wadhera cautioned on Tuesday.
“The auto sector was passing through one of the worst contractions when the lockdown happened. This year, the auto sector is looking at a decline of 26-45% depending on the vehicle category. Coupled with that of last year, we are looking at a decline of 50% in two years. When the demand is half, I don’t see any case for investment in the sector. Investments will dry up. Whatever investments are in the pipeline to get products out will be made. But very little money will be put into new products or plant and capacity addition,” Wadhera said.
Union transport minister Nitin Gadkari had set an EV target of 30% by 2030, up from 1% at present. That would mean sales of at least 1.5 million passenger cars assuming that the auto industry then manufacturers 5 million cars, up from 4 million at present. To achieve this, companies will have to invest several thousand crores in technology, design and development of EVs.
But the SIAM chief did not see this happening. “You can’t keep on borrowing money and investing. Even if you want to, if you do not have revenue you cannot invest,” Wadhera said, adding that the industry cannot “afford” to invest in EV in the present scenario.
The only way India could avoid missing the EV technology and growth curve, he felt, was through government incentives to revive demand and collaboration between industry and academia. “Governments all over the world, including the US, Italy, France and even Thailand have provided incentives to the auto industry. Since last September, we have been trying to impress upon the government to introduce fiscal measures that can generate demand. We are also seeking a 10% GST cut across categories and introduction of scrappage policy with incentives like 50% rebate in GST, road tax and registration charges,” he reasoned.