BW Communities

The Green Drive

Neeraj Thakur Jun 23, 2015

When US President Barack Obama visited India this January, the quality of air in New Delhi made more headlines in his country than the Republic Day celebrations at which he was the chief guest. The US media could not be faulted for highlighting the alarming levels of pollution in the Indian capital, which ranks among the most polluted cities of the world. The truth is that New Delhi and many other Indian cities are choking on polluted air. Even with measures like the introduction of CNG buses, expansion of the Metro rail network and phasing out of old vehicles, the quality of air in Delhi has tended to improve only for brief periods before getting worse again. The culprits: The ever increasing vehicular traffic and construction activity in and around the capital.   As authorities in New Delhi and the states have sought to grapple with rising pollution, the now-ubiquitous e-rickshaws have come to be touted as an answer to the problems facing the cities. There is now a thinking in states and at the Centre that electric and battery operated e-rickshaws can serve as an alternative, cleaner mode of transport in cities big and small without adding to the pollution. The upshot of all this has been that e-rickshaws, which were being assembled from kits imported from China, have caught the attention of organised players who earlier stayed away from them due to issues of legality.   This newfound interest of governments and industry in e-rickshaws has, however, come about more as a result of a series of developments going back a few years, than by any planned positioning of e-rickshaws by authorities as an alternative and cleaner mode of commuting in cities. In 2009, the Delhi government first introduced e-rickshaws ahead of the Commonwealth Games to showcase and facilitate clean commuting to and from the sporting venues. Soon, the electric tricycles caught on and became a convenient mode of transport over short distances in the capital. But as e-rickshaws grew in number, they caused chaos on the roads of Delhi and adjoining cities, drawing the ire of citizens and courts. In the absence of rules and regulations for e-rickshaws, the Delhi High Court in July 2014 slapped a ban on them. As a result, people who had invested in these vehicles lost money and the companies that assembled imported kits also suffered. The ruling impacted the livelihood of over a lakh in Delhi. After months of standoff with the Delhi HC, which refused to revoke the ban on e-rickshaws, the Centre brought the Motor Vehicles (Amendment) Bill, 2015 seeking to legalise e-rickshaws. <img alt="" src="http://bw-image.s3.amazonaws.com/e-rickshaw-stats-lrg.jpg" style="width: 595px; height: 141px;"> The Bill’s passage in March opened the gates for organised players such as Hero Electric, Terra Motors and Lohia Auto Industries to enter a space that has the potential to grow to Rs 5,000 crore in a few years. The law lays down that e-rickshaws of specific designs only can ply on the roads, that all drivers must get themselves registered for a licence and that certain safety norms have to be followed. Besides Delhi, Allahabad, Lucknow, Mohali, Ballabhgarh, Raipur, Tripura and Kolkata are among other cities that have introduced e-rickshaws to provide last-mile connectivity to commuters. Mumbai, which faced strong protests from auto and rickshaw unions, is conducting a feasibility survey. With the new amendment making it easier for states to legalise electric three-wheelers in their cities and towns, organised players are ready to launch their own products. Take, for instance, Lohia Auto Industries, which launched its Humrahi electric tricycle at a price of Rs 1.10 lakh soon after the government regulated the sector and notified the safety norms for e-rickshaws. In fact, it had been ready with an indigenous design for over two years. To push sales, it is tying up with companies to make loans easily available. “We manufacture 99.9 per cent of the 512 parts of Humrahi in India. Our product meets all the safety standards and we are looking at a pan-India business,” says Ayush Lohia, CEO, Lohia Auto Industries, which also manufactures electric scooters and diesel three-wheelers in the ration of 10:90. Lohia is positive about the e-rickshaw business and expects the segment to be the highest contributor to the company’s topline in the coming years. Over the next five years, he expects e-rickshaws to contribute over 40 per cent of the company’s revenue. “We sold 200 e-rickshaws last month (in May), and expect to sell around 50,000 by 2017. This segment will contribute around Rs 300-400 crore to our topline,” he adds. <img alt="" src="http://bw-image.s3.amazonaws.com/SOHINDER-GILL-TEPPEI-SEKI.jpg" style="width: 640px; height: 260px;">  Hero Electric, a big name in electric cycles and scooters, has also entered the fray with its Rahi this April. Other than Delhi, the company is targeting four states including West Bengal and Gujarat, according to Sohinder Gill, CEO of Hero Electric. Even foreign firms are now showing interest. Japanese startup Terra Motors, which sells e-scooters and e-rickshaws, has opened its office in India. The group, present in the Philippines and Bangladesh, sees India as its biggest market in the coming years. It has decided to import spare parts from China and Japan and assemble the vehicles here. “We believe India is going to be a big market in the coming years. There is a need for last mile connectivity in Indian states, and we want to exploit that,” says Teppei Seki, the founding member and director, Terra Motors. Risks Galore There are quite a few challenges for e-rickshaw players, though. For one, the laws around them need to change. Only then, as Hero Electric’s Gill says, unorganised players will not be able to sully the sector by making and selling sub-standard products. Also, urban planning experts do not think e-rickshaws are entirely clean. Shriya Gadepalli, regional director, Institute for Transportation and Development Policy, says, “E-rickshaws... mean pollution elsewhere as the electricity required to charge them is produced by burning coal.” Besides, the e-rickshaw business has to contend with the unions of auto and taxi drivers who feel threatened by the entry of this relatively cheap vehicle. In Mumbai, even as a feasibility study is on, the unions are putting up stiff resistance against e-rickshaws. In 2014, many companies that had tied up with dealers in Mumbai had to shelve their plans because of the opposition. One can’t tell whether these noise- and- smoke-free vehicles will turn into a big sector. But what one safely say is that while these vehicles may not rid cities of their pollution, they will certainly not be a party to it. (This story was published in BW | Businessworld Issue Dated 13-07-2015)