Automakers told to create complete ecosystem for electric vehicles, eliminate imports
27 August 2021
With the transition toward electric vehicles (EVs) now inevitable, Niti Aayog CEO Amitabh Kant said Indian auto manufacturers must aim at securing a strategic position in the global value chain, eliminating the need for any imports of components.
Local auto manufacturers are heavily dependent on China for imports of electric-vehicle components and other automotive parts.
“It is important that certain automotive components, which are being imported from China purely on the back of cost competitiveness and development capabilities, be manufactured here,” said Amitabh Kant, chief executive officer of government policymaking body Niti Aayog. “We should not become a major importing nation in electric-vehicle components like we’ve done in solar.”
The pandemic caused by the Wuhan virus amidst global trade tensions with China have intensified the need for countries around the world to move manufacturing bases out of the country to reduce supply-chain risks. India has an additional reason of continuing border tensions with China to diversify its supply chains away from that country.
India, Asia’s third-largest economy and home to more thqn 1.3 billion people, has always been looking for cheaper supply sources, rather than making these products within the country. This must change, Kant said at an event organised by the Automotive Component Manufacturers Association of India on Thursday.
India is dependent on China even for magnets used in the motors of EVs, semiconductor-based components, and other electrical parts, he pointed out, adding this should “not only be minimised but eliminated.”
“You’ve got to derisk the supply chain by boosting localisation, reducing dependency on imports and I would like to say imports from China,” Kant said.
“Indian manufacturers must clearly read the writing on the wall and aim to secure a strategic position in the global value chain,” Kant said.
Most Indian automakers are shying away from switching over to electric vehicles because of the high cost of manufacturing, including that of components. The shift to EVs in India that battery models account for only 1 per cent of the nation’s annual car sales.
Tata Motors and Mahindra and Mahindra are the only EV manufacturers worth mentioning in the country wile top car maker Maruti Suzuki does not make ant battery=operated models.
Tata Motors currently leads the nascent sector with its best seller Nexon while Mahindra and Mahindra sells one electric passenger car model, the e-Verito, which is made to order. .
“Electrification can only happen at large scale in India when the customer finds it is in his interest to buy an electric vehicle rather than an internal combustion engine,” Maruti Suzuki chairman R C Bhargava said at the same event. “Given the state of infrastructure in various areas, this process will take some time and the internal combustion engine vehicle will continue to be in production for many, many years,” he said.
“If established players don’t move toward electric vehicles, you will see startups disrupting all of you and they will capture a very large segment of the market,” Kant said.