Electric vehicles are the biggest opportunity for some and equally the biggest threat for some others. Eventually, it depends upon which side the players take, reiterated Pawan Goenka, Chairman, INSPACe & Chairman, SCALE Committee at the 62nd ACMA (Automotive Component Manufacturers Association of India) annual session in New Delhi on Wednesday.
No player in the EV space can afford to take a breather, he added in his capacity as Guest of Honour, while highlighting five key elements that would play a major role in the future of EVs. These are localisation, exports, the internal combustion engine (ICE), advanced technologies and start-ups.
While elaborating on each of these topics, Goenka said localisation was an easier route compared to imports. The former Managing Director of Mahindra & Mahindra added that India has the fifth largest reserve of ‘rare earth’ materials but the country has not made even a single permanent magnet. It has always been importing the same.
On exports, he rued that India accounts for only 1.5% share of global auto components and needed to grow to at least 5% if it had to make up for lost ground. Consistent quality and better supply chain would be a big help too.
As for ICE, Goenka was of the view that it would continue to grow at a slower pace in the next five to 10 years. The Centre has incidentally set a target of 30% electrification for passenger cars by 2030, which means that ICE will still be around.
While dwelling upon the fourth element — advanced technologies — Goenka said there was virtually nothing in India. “My association with the space industry convinced me that the auto industry cannot do (what the space industry has been doing) in terms of developing advanced technologies,” he added.
It was also his view that while the IT industry in the country develops cutting-edge technologies, their collaboration with the automotive industry was really not up to the mark.
Goenka wondered if the auto sector was working with the hundreds of start-ups, which are already in place. “Are the start-ups looked at as competitors or is the industry complementing them?” he asked.
Collaborate With Start-Ups
Chief Guest, Amitabh Kant, Hon’ble Sherpa, G20, echoed these sentiments and said electric mobility would play a key role in the transportation ecosystem.
“Improved safety, battery technology, faster charging and greater range will become major factors in the next couple of years,” he added while driving home the point that the revolution would make EVs more affordable.
According to Kant, the country’s EV journey right now was all about 2/3- wheelers. “We need to target 100% electrification (in 2/3-wheelers) so that India can emerge as a global champion in these segments,” he said. This is where the auto component industry needed to become the champion of new technologies.
Kant was of the view that there were huge growth opportunities for suppliers. The challenge for India was to create two Americas in the next five decades in terms of GDP, which translates into “creating two Chicagos every two years”.
He said robust public transport was another critical aspect in the journey towards modern India with e-buses playing a big role in metros. “India must emerge as a leader and everyone should join to make this movement successful,” added Kant.
However, there were challenges to be reckoned with in terms of higher collateral and insurance charges for EVs, which needed to be brought down as well as the limitations in charging infrastructure and localisation.
“The entire value chain needs to be built in India,” he said. The country is home to the best IT industry and “better convergence” was needed for the growth of EVs. Component makers would therefore have to work with IT companies in a big way.
“The start-ups are disrupting this space and others are following. This trend will continue if others do not adapt to electric. You have to face it... electric is the future,” signed off Kant.
Developing Ecosystem
Sunjay J Kapur, President ACMA and Chairman, Sona Comstar said the auto industry was fast transforming into a mobility industry, which meant greater attention had to be paid to ESG (environment, social and governance), cybersecurity and electrification.
R Dinesh, President-Designate, CII and Executive Vice-Chairman, TVS Supply Chain Solutions, said the auto component industry could attempt to create sovereign capital in an effort to augment acquisition, which would help it scale up significantly.
Share of auto components in the global automotive aftermarket is about $100 billion and India’s share is just 2-3%. Investments should be made to build Brand India, he added. Dinesh said the $19 billion exports recorded last year could be trebled in three years as there were enough opportunities to be availed of.
Kenichi Aiyukawa, President, SIAM and Executive Vice-Chairman, Maruti Suzuki India said the auto industry was going through a “unique pace” where entry level cars and two-wheelers are facing the heat due to increased acquisition cost.
“SIAM and ACMA should collaborate to bring back the sustained growth for the auto industry as the future will see transformation in the fuels used right from petrol, to diesel, CNG, battery electric vehicle and hybrids,” he added.
Ayukawa said the component industry had to work harder on increasing localisation to higher levels and improve quality. He warned that even a small flaw in quality would affect Brand India. He added that component makers needed to invest in new and futuristic technologies as well as the core business to deal with emerging challenges. “Investing in R&D must be encouraged to make India an R&D hub for the world,” said Ayukawa.
As part of the event, Quality Circle Award 2022 was presented. Of the 265 teams that participated, 12 emerged as winners. Rane Brake Linings, Puducherry, was bestowed with the National Quality Championship award.
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