Developing the Commercial Vehicles Segment
Developing the commercial vehicles (CV)segment would help create more livelihoods, develop infrastructure through a strengthened logistics sector. The Indian commercial vehicle industry has been considered the backbone of the Indian economy. India enjoys an extensive and everexpanding road infrastructure network that seamlessly facilitates transportation and travel. The automotive logistics market can be segmented into passenger vehicles and commercial vehicles. Over 50 per cent of freight and logistics movement across the country is done through roads due to easy access and cost.
On the other hand, the public transportation network also serves as the lifeline in the major cities of the country. Public buses are the primary mode of transport for the people, both for the city as well as intercity commute, especially in the vast majority of Tier 2 and 3 cities of India. The commercial vehicles deployed in India have, thus, aided in escalating trade, commerce, travel and transportation. Overall these years, the CV sector has brought about expansion in fleet size with improved safety parameters, driver sensitisation and training, vehicle advancements such as fleet health and monitoring systems, etc. The industry has, as well, witnessed mega
shifts in terms of technologies, policies and the market i.e. changing consumer preferences due to e-commerce. The transition towards BS-VI emission norms, shift towards e-vehicles and the implementation of the new axle norms have been some critical developments that have transformed the Indian CV industry in the recent past.
The performance of the auto sector in FY20 compared to FY19 has not been very promising in itself due to the slowdown with commercial vehicles going down by 30 per cent. With the pandemic hitting, this has further taken an adverse toll. However, the announcements made by the government in the recent past concerning domains such as electric vehicles and EV charging infrastructure, the sentiments are sure to be restored as we gradually come out of the COVID phase. Government of India is a key facilitator for igniting the adoption of electric buses for mass transportation.
The FAME policy was launched under the aegis of Ministry of Heavy Industries to provide an ecosystem of electric vehicles, key electric aggregates, charging infrastructure, skilled manpower and education to all stakeholders under time-bound projects. FAME II policy covers 10,000 crore of subsidy for different segments of the EV ecosystem where 43 per cent is available for electric buses promoting its mass adoption which translates to around 7,000 e-buses.
India is one of the fastest-growing economies in the world. Aligning with this growth, the commercial vehicle market in India has substantial growth opportunities to offer in the country's mammoth manufacturing sector. Moreover, post-COVID, India is being looked at as the next manufacturing destination from global companies. The bilateral ties between India and Japan, Korea, and the USA will certainly have a long-term positive impact in this regard. Japan had earlier announced a $2.0 billion investment package for companies to move out of China.
The Make in India programme is sure to gain increased momentum with the inflow of foreign companies, thereby, strengthening the manufacturing capabilities inhouse and India well-positioned in becoming the contract manufacturer for the world. With a growing population too, India is set to transform itself radically over the next decade. Recognising the opportunity, the Indian government has been working to attract more Foreign Direct Investments (FDIs). It has demarcated 4.62 lakh hectares of land across the country which also includes 1.15 lakh hectares of existing industrial land for firms relocating to India from China. All of this transition will necessitate the requirement of commercial vehicles that will aid towards setting up the required infrastructure in place.
The development of infrastructure would also give rise to the need to maintain it. This maintenance would only be possible if there is adequately trained manpower. This increase in de mand would eventually generate more opportunities for the people.
The logistics and transportation sectors are the buoy of the commercial vehicle manufacturers which helps the industry afloat. As per initial forecasts at the beginning of FY2020-2021, the logistics market in India was slated to grow at a CAGR of 10.5 per cent between 2019 and 2025. The factors that are set to streamline the Indian logistics sector are granting of infrastructure status to the logistics industry, introduction of the e-way bill, GST implementation, development of dedicated freight corridors and logistics parks. On the public transportation side, India currently has around 1.6 million buses on road. The bus density stands at 0.75 buses per 100 people and it is targeted to be raised to 1-1.5 buses per 100 of population. For instance, in Delhi alone, there is a requirement of 11,000 buses but currently, only 6,000 buses are plying on road. This brings in tremendous opportunities for the CV sector towards growth by bringing in products and solutions that are safe, secure and sustainable, thereby, optimising the total cost of ownership.
As per a recent study, the automobile sector employs over 19 million people directly or indirectly across OEMs, auto components, raw materials, auto dealers, service centres and other support sectors. By 2022, employment in the auto sector is expected to touch the 38 million mark. Owing to the recent developments in the sector, there is a need for competent and hands-on manpower in the commercial vehicle sector and this would only multiply in the coming years. For the fulfilment of the 'Atmanirbhar Bharat' and 'Vocal for Local' vision of our Hon'ble Prime Minister, the commercial vehicle segment will play a pivotal role in conjunction with the logistics and transportation sector.
The author is Executive Director, JBM Group
