Livemint: May 13, 2019
Mumbai: Top automakers have cheered the government’s recent push to localise manufacturing for hybrid and electric vehicle (xEV) under the revised norms of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles Scheme (FAME 2).
This is in sharp contrast to the several instances over the last decade where auto industry stakeholders have clashed with government agencies on multiple fronts such as dual fuel policy, roll out of CNG stations, vehicular pollution, emission norms, safety mandates, as well as the government’s thrust on biofuels and electrification of vehicles.
Mint had on 7 May reported that the latest draft guidelines on FAME list components such as control units, chargers, and AC units that need to be built locally, with specific deadlines, for manufacturers to qualify for subsidies under a government scheme launched to encourage the adoption of such vehicles.
FAME, which was introduced on 1 April 2015, entered its second phase (FAME 2) in April 2019.
The country’s largest carmaker Maruti Suzuki has already made significant investment in the local xEV supply chain and is setting up an EV battery plant in Gujarat and others are expected to follow suit.
“The intent to localize the key parts and aggregates in a reasonable timeframe will benefit all stakeholders in the long term," said Shailesh Chandra, president, electric mobility business and corporate strategy, Tata Motors. “Our team is studying the latest notification to understand its full implications. The government’s approach of defining a PMP (phased manufacturing program) does help bring clarity to the value chain, including the suppliers, to work towards progressive localization," he said.
“Tata Motors has a local supplier base available for most of the parts notified under the PMP and is working closely with the identified suppliers to localize the remaining parts," he said.
“The PMP under FAME 2 will boost local manufacturing of EV components, including the battery packs, power electronics, and electric motors to be made in India for the world," said Mahesh Babu, chief executive officer, Mahindra Electric.
“Our EV strategy is in line with the government’s vision of making India a sustainable EV market," said Puneet Anand, senior general manager and group head, marketing, Hyundai Motor India. Mint had reported on 19 April that Hyundai is talking to suppliers to develop EV parts in India.
While there is a broad agreement, certain deadlines by which manufacturers have to localize specific items may not be feasible to all.
“These issues are under discussions with the government and we hope a few alterations will be incorporated," said Karthick Athmanathan, head, EV and eMobility solutions, Ashok Leyland. The Chennai-based company said that as part of cost rationalization, aftermarket spare support, and inventory control, it has been engaged with its EV suppliers for the past one year.
Nishant Arya, executive director, JBM Group, also agreed that the move is a positive step towards India’s adoption of EVs but also demands clarity on incentives at the supplier level. “The key requirement here is clarity on incentives on these investments to domestic manufacturers. This shall give them an opportunity to plan and work towards investing in innovation and technology, creating an overall robust ecosystem," Arya said.
The incentives under FAME 2 are strictly for localization and not for funding imports, said Vinnie Mehta, director general, Automotive Component Manufacturers Association of India. He, however, expects the government to relax deadlines for genuine challenges on a case-by-case basis.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.