‘Rs 10,000 Crore Under FAME2 Has Not Been Efficiently Channelised’
Despite the Modi government not offering any package for the fledgling electric vehicles (EV) industry, Sohinder Gill, Director-General, SMEV & CEO, Hero Electric says he thinks that if the already-sanctioned Rs 10,000 crore under FAME II is efficiently deployed across the ecosystem, the EV industry will remain buoyant for the next few years. Edited excerpts of an interaction with BW Businessworlds’s Avishek Banerjee
How do you see the electric vehicles (EV) industry performing in the next three months? Will the numbers be extraordinary? If yes, please eleoborate.
There is not going to be a major change because in the short term everybody is facing the same problem. Nothing drastic is going to happen in the first three months. In the mid to long term surely, we are expecting an upsurge. As compared to fossil fuel vehicles, there could be a slightly better performance of electric vehicles, especially in the two-wheeler and three-wheeler space. Electric vehicles will gain a lot because people are shifting from public transport to private transport.
The govt has recently come out with Rs 20 lakh crore ‘Atmanirbhar’ package. What are the key takeaways? Have your industry’s concerns been addressed?
I think the government is trying to do the best it can. With limited resources and with India as a country, you cannot expect a lot of money. Now, it is about the survival of the industry and they have to fight their own battle.
We can’t expect the government to spend more money towards the industry forever. Already Rs 10,000 crore had been allocated 2-3 years back for phase two of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles, or FAME II, a project that seeks to boost the number of EVs in commercial fleets.
All we are saying is that the amount should be spent wisely keeping in mind what will make the maximum impact and the learnings that we had from the first year of operations of FAME II.
FAME II has been a debacle because Rs 10,000 crore has not been spent properly. Let us spend that judiciously and convert that into 1 million vehicles on the road. All the blockades which have reduced the FAME subsidy have to be removed. We are not saying give us more than Rs 10,000 crore, but within that amount we need to see what went wrong and what to do right. That may be sufficient for one year. Secondly, steps have to be taken. A green tax should be imposed on fuel. Even if Re 1 is levied per litre of petrol, we will get so much money that we can easily subsidise a large number of electric vehicles. So without hurting the government’s exchequer, we can go green. These two things are enough.
Another thing the government can do is convert 3 million delivery two-wheelers into electric vehicles in multiple phases. Here, they can begin converting 20 per cent of their fleet into electric vehicles next year and another 20 per cent the year after that. So in four-to-five years we will have 3 million electric vehicles doing deliveries. So there, mandatory rules can be introduced. Also, it will be really nice if the government can talk about clean air campaign and raise awareness. That will be very helpful.
How has the electric vehicles industry been able to reboot its manufacturing operations? Are all the dealership outlets open now?
We have 1,000 dealers across the country out of which 500 have opened until 30 May. In green zones and orange zones, our dealerships are opening. They have stocks of one-to-two months and once that gets depleted, they will start ordering from manufacturers. Also, factories have started working with a very small workforce of 20-30 per cent. Some migrant manpower has to come back after some time. The total capacity utilised is 10 per cent of the overall output and is 40 per cent of last year.
Companies like Hero Electric, Okinawa, Ampere, etc. are getting a very good traction in online sales. For example, nearly 20,000 people have showed interest in Hero Electric in the last one month through the online route. From that perspective, I am very sure that manufacturing will quickly start when these people start getting the vehicles from dealerships. Most of the dealerships are following a very good norm of Covid-proofing themselves like sanitising etc. Some of the companies have gone a step further and have started delivering electric vehicles directly to home. While the customer books the bike online, the dealer after sanitising the vehicle delivers it at the customer’s doorstep.
As anti-China sentiments are going up and the government is also talking about self-reliance, how are you reacting to these two developments?
See, all the leading players already started indigenising about a year and half ago. Except one or two items where India is not manufacturing at all i.e. cell and motors, other things are already being manufactured by the EV industry to a large extent. It is only a few small players who are importing from China. If you look at other automobile manufacturers, they are also importing quite a bit of components from China. They are also not 100 per cent localised.
Luckily, the government has understood the problem and so postponed the deadline for indigenisation to September 2020. Now, we are expecting some component manufacturers to make motors for us. So hopefully we are not going to be dependent on China after October. For lithum cells, we may shift from China to Korea, Taiwan etc.
With the Atmanirbhar policy, has the government done enough for the MSMEs catering to the EV industry?
Yes, they have corrected the turnover clause of Rs 250 crore. Many mid-size firms which had a turnover of less than Rs 250 crore and more than Rs 100 crore did not fall into the definition of MSME, and as a result, did not qualify for whatever benefits were offered by the government earlier. So the new turnover clause is a very good step that the government has taken. With this move, many of the companies in the EV sector that have a turnover of less than Rs 250 crore will be benefited.
Do you foresee any job cuts in the EV sector? If yes, can you shed some light on that?
To my knowledge, there has hardly been any job cut in the electric vehicles industry. But yes, there have been job cuts. Because everybody is hoping that electric vehicles will spring back much earlier than fossil fuel vehicles, job losses in the electric vehicles industry are very few.
Similarly, when there is growth in numbers, it will generate a lot of employment opportunities. If the consumers, industry and government are serious about the environment, what stops the conversion of 20 million petrol two-wheelers into electric vehicles.
In two-three years’ time, because of mere volumes, there will be a major change in this sector and it will be a major employment generator. Also, because of the new technologies required in electric two-wheelers, three-wheelers and buses, there will be a lot of new skills required in this industry. It will attract multiple disciplines like software engineers, electronics engineers, etc.
