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Gujarat gains speed as e-vehicles hub

Business Standard:  September 29, 2017

New Delhi: Days after Suzuki Motor Corporation (SMC) and the Jindal Group announced their lithium-ion battery and e-vehicle projects, respectively, in Gujarat, official sources said a Chinese company was set to come up with an electric twowheeler plant in Rajkot, bolstering the state’s bid to become an e-vehicles hub.

“A Chinese automotive company is setting up a 50,000-units-a-year electric two-wheeler plant in Rajkot in collaboration with a local partner,” a senior official of the state government said, without revealing the name of the company.

The official said firms found a ready ecosystem to make vehicles in the state. “There are forward and backward linkages and port connectivity, apart from fast clearances, which are attracting new players. Once Gujarat develops a mature ecosystem for electric vehicle manufacturing, the state would attract more players,” he said. The state government, though, has not come up with any special incentives for electric vehicle players as of now.

Gujarat’s push to bring in investment in the automotive sector is understandable, as the state government plans to increase its share in the overall engineering output to 10 per cent by 2020, from the current 3.7 per cent.

Meanwhile, SMC, the Japanese parent of Maruti Suzuki India, has started work on the ~1,151-crore lithium-ion battery manufacturing unit in the Suzuki Motor Gujarat suppliers park in Hansalpur, and it is expected to be operational by 2020. The project will be implemented by a joint venture (JV) of SMC, Denso Corporation and Toshiba Corporation, in which they hold a 50 per cent, 10 per cent and 40 per cent stake, respectively. The JV plans to mount these batteries on hybrid vehicles manufactured in India and export them to the international market.

JSW Energy, part of the Sajjan Jindal-led Jindal Group, signed a memorandum of understanding (MoU) recently with the Gujarat government to set up a ~4,000-crore electric vehicle manufacturing facility in the Surendranagar district. The plant will have the capacity to make 200,000 electric vehicles a year. State government sources said the company had sought 500 acres of land and aimed to expand the production capacity to 500,000 vehicles eventually.

An electric variant of the Nano was recently tested. Sanand being the hub for Nano production, in case an electric variant is launched in future, it would happen in Gujarat.

As such, Gujarat’s automotive production is steadily on the rise. During 2016-17, Gujarat roughly produced 1.1 million cars and two-wheelers, according to data from the Society of Indian Automotive Manufacturers as well as companies. This is a sixfold increase from 160,000 units produced in 2015-16.

In FY17, the HMSI Vithalapur plant produced 945,000 units. The company targets 1.2 million vehicles production at Vithalapur in FY18. Suzuki Motor Gujarat’s (SMG) Hansalpur plant is onstream now. It targets to produce 150,000 units in the current financial year. Tatas, too, plan to achieve 100 per cent capacity at Sanand within FY18.

“Honda Motorcycle and Scooter India’s (HMSI) is also in talks with us for expanding the capacity at Vithalapur by adding another production plant,” said the official.

Gujarat has been home to other electric vehicle players like Electrothem India Ltd and Ajanta Group (that marketed the Oreva brand of e-scooters). However, dwindling sales pushed these units into the background and not much production happens now.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.