Union Minister for Road Transport and Highways Nitin Gadkari again calls on OEMs to adopt alternative fuels ‘in the national interest’, and warns the reluctant ones that the market will move ahead, with or without them.
16 Sep 2024 | 2882 Views | By Hormazd Sorabjee
It's always a pleasure interacting with you. Last financial year, we overtook Japan to become the third largest car-making nation. What is your vision going forward: How do we sustain growth, and what do you feel are the opportunities and challenges?
The automobile industry is very important. It has ...
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It's always a pleasure interacting with you. Last financial year, we overtook Japan to become the third largest car-making nation. What is your vision going forward: How do we sustain growth, and what do you feel are the opportunities and challenges?
The automobile industry is very important. It has created 4.50 lakh jobs in the country. We need to develop the economy, which is going to create more jobs, and that is the most important need of the country.
The other important issue is regarding revenue for the government. The GST contributed by this industry to is the highest for any industry in India, and that is one of the reasons that the government already feels the highest priority for the development of this industry.
Presently, the size of our industry is approximately Rs 22 lakh crore and auto component industry size is something like Rs 5.18 lakh crore. There is 9% growth [in the industry]. And the only one thing, which I feel is a challenge isthat imports are Rs 1.68 lakh crore and exports are Rs 1.76 lakh crore. This is because of semiconductor imports.
Today, we have a policy because of which we’ll soon be in a position to manufacture semiconductors in India. And the second important import is lithium-ion batteries. Today, Tata, Adani, Panasonic... five companies are working on that. We are also developing zinc iron, aluminium ion chemistry... the costs will be reduced, and we won’t need to import the batteries.
In due course, within two-three years, by adopting the new innovation and technology, I am confident that this import is going to reduce.
The component industry is expected to grow 8-10% in 2024-25. India is becoming the hub of automobile manufacturing- for all reputed brands in the world. Some of the people will come or not come, that is a different matter. As for our Indian manufacturers, they are developing products, designing, quality and efficiency, really beyond expectations. That is the reason that our products are very popular in the whole world.
In the automobile industry, 50% of the production of Bajaj, TVS... are exported. That is the reason there is huge demand for Indian products in many countries. So, I am confident the future of this industry is very bright. I have always felt that we should make India the number one automobile manufacturing hub in the world. I am very confident.
We have to reduce our logistics costs to increase our exports. Presently, it is 16%. In Europe, it is 12% and in China, it is 8-10%.
We are making good roads now, very good roads. And if you can use the good technology with innovations, and with alternative fuels, you can reduce logistics costs. That it is going to increase our exports and strengthen our economy. So I feel the future of this industry is very, very good.
On the issue of scrappage, OEMs are giving up to 3% discounts on new vehicles for the old vehicles. Is that enough? Do you think that, along with concessions on motor vehicles tax, is enough to make this policy a success?
I am talking very frankly: I don’t need to make any request to anybody, because everyone wants to increase their sales, and if you want to capture the market, there is no option but to increase the discount.
If the product is good and the rates are reasonable, they will get a good turnover, good results. If the people [OEMs] are not ready for that, they have to face the music [in the market]. These are very intelligent people, they understand business. So, I’m 100% sure they are going to increase their discount. I don’t need to tell them. They understand the benefits better than me.
And there is competition. Someone calls and says I will give 3%, another will call with 3.5%. So the consumer benefits. So, it is up to you, if you want good business, you have to improve your product, your rates, and your efficiency.
I want to turn to another topic, the transition to net zero carbon. There are more EVs on the road, but there are multiple paths to decarbonisation. What are your views on that?
First of all, I am not against petrol and diesel, or fossil fuel. Sometimes, unnecessarily, my statement is misinterpreted in the media. I’ll tell you my stand, and you can tell me, guide me, correct me.
We have an import bill of Rs 22 lakh crore for fossil fuels. Is it not a challenge for the country?
The second thing is: 40% of air pollution in the country is because of the transport sector. I am the minister who is responsible for that. Is it good? I am telling you I never want to be in Delhi. Every time [I am here], I get an infection. Ethics, economy, ecology and environment, these three are the important pillars of the society and I feel that we need to protect our country from air pollution, noise pollution and sound pollution. This is the main thing.
Secondly, there is economics, and the survival of the fittest. I got the opportunity to launch the CNG scooter of Bajaj. Rajiv [Bajaj] told me that the cost of running the bike on CNG comes to 1 rupee [per litre], compared to 2 rupees 25 paise for petrol. So there is more than 50%, 60% saving in fuel costs.
The consumer is going to go for that. If you want to capture the market, you have to give such options to the people. Similarly, I got a Toyota car with an ethanol flex engine. It is much more economical compared to petrol.
And the third important thing is the benefit to farmers. Today, the rural agriculture, and the tribal economy is facing a really big problem: 65 to 70% of the population is engaged in agriculture and their contribution to GDP is only 12%. What they need is diversification to agriculture plus energy and power [by converting] sugar cane juice to ethanol, molasses to ethanol, corn to ethanol and so on.
Last year, the rate of corn was Rs 1,200 per quintal. The commercial price of corn was less than the MSP. And today, because of ethanol from corn in Bihar and UP, the rate is Rs 2,800 per quintal. So farmers are getting double the price, and at the same time, we are reducing our imports.
Is it not in the interest of the nation? This is how I feel. But I am not against anybody
But when there is economic viability, and you are getting a good market, why do you insist only on [making] petrol and diesel vehicles? You should give the option.
And finally, let me tell you something. I had asked one of the giants in the auto industry, my good friend, to go electric, but he was not convinced. Now, he tells me — I had not taken you seriously because our experience in dealing with politicians has not been very great, and today, I feel I have missed the bus.
So, people who adopt cost saving technology, create less pollution and offer a reasonable price have a good future.
Some, who have good sales and a good market share, don’t want to change. My best wishes to them. But they will face a problem. This is the time you have to change, as the market is changing, the choices of the people are changing. As for me, it is my duty to implement this policy in the interest of the nation and society, and from the point of view of the economy and pollution.
It is clear that you are looking at technologies that don’t rely too much on imports. But do you feel that EV penetration should be higher? It is right now 2% for PVs and 6% for others. Are we on target to meet the goal of 30% penetration by 2030, or do you think this could take longer?
I am not an expert. I am a minister, and a minister is not supposed to be an expert. You leave everything to the market and people’s choice. They are the best judges. India needs import substitutes — cost effective, pollutionfree and indigenous. Someone may come with drone technology, we can use it. Now, we have already had discussions with Tata. In my own city (Nagpur), I am doing a pilot project that uses a charging system from Hitachi… We are going to implement the trial project.
There is a lot of demand in the market [for such solutions]. Those who can understand this, and are ready to change, they can get good orders, good support from the people. I don’t have any target for that.
I don’t need to tell anybody to purchase this scooter. The consumer is making the correct decision. People like you have to understand the feelings of the people, the feelings of the market. On the basis of that, you have to formulate your policy, by which it will be beneficial for you.
Do you think some sort of incentivisation is needed to accelerate that growth?
First of all, I am not against any incentives; the heavy industries minister is responsible. If you want to give more incentives on EVs, I don’t have any problem. The argument from my side was that when e-vehicles were launched, the price of a Li-ion battery was USD 150 per kilowatt hour. Now it is something USD 108-110. I am confident it will come down to USD 100. The scale of manufacturing has also increased. I feel that within two years, the cost of the electric vehicle will be the same as that of the petrol or diesel vehicle. So, my argument was that buyers don’t need subsidies because they are already saving on fuel. But, if the finance minister and heavy industries minister want to give subsidies, I don’t have any problem.
One last topic which is close to your heart — road safety. I know you’ve really championed this. Do you feel disappointed that the rate of fatalities hasn't come down as much as you would have liked. What do you think needs to be done?
This is really one of the dark issues for my ministry. We are trying our level best, but we cannot get much success. I can accept that this is one of our failures, that even after taking a lot of effort, we are not getting good results. Today, we have 5 lakh accidents and 1.68 lakh deaths [per year], nearly 53 accidents and 19 deaths per hour. Of these, 66% belong to the productive age of 18-36. It’s very unfortunate.
Nearly 45% accidents are with twowheelers and 20% with pedestrians. And in 2022, there were 30,000 deaths due to the nonusage of helmets, and 30,000 accidents in institutional areas such as schools.
Just today, I got information that in one district in Assam, accidents have been reduced by 35-40%. One of the main culprits in the accidents is road engineering: I am always telling off my engineers and holding them responsible. But I still feel that the problem is with the society: There is neither fear nor respect for the law.
This is where the industry can make a difference: You can make a programme, and change the mindset of the people. You can concentrate more on schools, because they are the future generation and we can change their mindset.
I appeal to the industry to support this activity and take up some programs to reduce accidents. Our target is to reduce the accidents by 50%, but still we are not getting the expected success.
This feature was first published in Autocar Professional's September 15, 2024 issue.