Automotive Sector's Growth Integral To India's $7 Trillion Economic Ambition: Volvo MD Kamal Bali
As India sets its sights on achieving the goal of becoming a USD 5 trillion economy and beyond, the nation's automotive sector will be a key player in this transformative journey. Comprising nearly half of the manufacturing landscape and contributing a significant portion to the GDP, the automotive industry stands poised to drive economic growth and employment opportunities.
In a conversation with BW Businessworld’s Rohit Chintapali, Volvo Group India President and Managing Director Kamal Bali speaks on the multifaceted impact of India's automotive sector on the nation's economic aspirations. Excerpts:
How will the Automotive sector contribute to your projection of India becoming a USD 7 trillion economy by 2030?
The Automotive Sector significantly impacts India's aim to be a USD 7 trillion economy by 2030. Comprising 45 per cent of manufacturing (15 per cent to 16 per cent of GDP), it is around 7 per cent of the GDP. Potential growth to 8 per cent could mean USD 500 billion in a USD 7 trillion economy. This sector's role in manufacturing expansion and broader economic effects underpins India's goal.
What factors will propel Automotive sector growth in India?
With a mere 8.5 per cent per capita car ownership, well below the global average, substantial room for expansion exists. Furthermore, the upcoming two decades anticipate a fourfold to fivefold surge in freight demands, complementing the existing rise in personal vehicle needs. This convergence of factors signifies untapped potential and pent-up demand, laying the foundation for a promising automotive industry growth trajectory in India.
What is the ultimate challenge for the automotive companies in India?
A significant challenge lies in the growing demand for increased mobility, which in turn exacerbates concerns about greenhouse gas emissions. Within the automotive sector, nearly a quarter (24 per cent) of all greenhouse gas emissions are attributed to vehicles. Volvo, among others, has made a public commitment to achieve net zero emissions by 2040. This pledge is particularly pertinent for companies specialising in large, heavy-duty trucks, as these vehicles alone contribute to 45 per cent of the total automotive emissions. This underscores the pressing need to develop alternative technologies and fuels that can lead to a net zero emissions outcome.
As the need for mobility continues to expand for both freight and private vehicles, finding ways to mitigate the negative environmental impacts, especially emissions, becomes a pivotal challenge. This has propelled the adoption of solutions like battery electric vehicles, hydrogen fuel cells, and green hydrogen as the industry strives for a sustainable way forward.
You have a forward-looking stance when it comes to drones and last-mile delivery. But it is going to take a lot of your (Volvo Group’s) business away. Why speak on it and support it?
Adopting a broader viewpoint and recognising the greater good is crucial. Doing well while doing good is a principle I endorse. Addressing genuine societal challenges often yields reciprocal benefits. I do not perceive alternative technologies or approaches as mere challenges. Our stance at Volvo Group is that solving prominent issues like urban congestion holds paramount importance, often overshadowed by greenhouse gas discussions.
City congestion mandates holistic public transport solutions, encompassing buses, metros, taxis, and more. Our commitment favours promoting public transport to alleviate both emissions and congestion. It is counterproductive to replace diesel buses with electric ones yet maintain the same congestion levels. While tackling emissions is essential, neglecting time efficiency and reduced congestion diminishes progress. Personally, I believe in the synergy of doing good to achieve both societal and individual prosperity.
