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NOV 13 2017

Opinion: Why electric vehicles will redesign India's future & create new jobs

  • Economic Times, ET Bureau / Hyderabad
  • Created: Mon 13th NOV 2017

 

Far too often, economists and policy wonks deliberate ad nauseum on the major sector bets that countries need to take to ensure their next economic leap ahead.

For the US, most experts proclaim that the US has intensely focused on deep tech and e-commerce (sometimes these lines blur altogether conveniently).  Germany, for instance, has taken a bet on highly specialized industrial manufacturing.

Korea and Japan, have taken a bet on high-value electronics and specialized consumer devices. China has  a clear national mandate to lead the global charge on artificial intelligence (AI) and its first cousins (self-driving cars and industrial robots).

Sparing you the entire UN Rolodex, I’ll fast forward to India. What’s the national mandate?  Is there a clear-cut economic mission where India will stand and clearly lead the world? Business process outsourcing?  Knowledge process outsourcing? Generic pharmaceuticals? Niche manufacturing?

It’s not 1985.  It’s not even 2005.  Now India must stand up and proclaim before the world where it will attack and lead over the next decade and beyond. I will use the proverbial bully pulpit here to make the case that India is uniquely positioned to take the lead on electric vehicles (notice I didn’t mention just cars!).

You might be sitting there and saying, but India hardly has any electric vehicles?

Well, on the surface that may be correct, but look a bit harder and you will find that the country already operates nearly over 2 lakh e-rickshaws (over half in Delhi alone). While electric cars still hover around only 10,000 pan-India, other modes of electric vehicles are starting to gain traction.

In the past few months, Ashok Leyland, Tata Motors, and Mahindra have all announced major plans to push headfirst into electric buses. Each OEM has committed a sizeable percentage of their bus fleet coming from electric in the next three years.

 

The government has also supported this with a defined incentive scheme that will help to reduce the upfront capital commitment while also helping  facilitate cheaper charging infrastructure through a cocktail of different incentives.

While the electric bus movement in India has some real momentum, perhaps it’s the electric two-wheeler market that holds most promise. With Hero Motors backed startup Ather Energy surging forward with a robust electric scooter, it’s clear that large conventional players also believe this electric vision.

Not content to cede the electric fun to Ather, Mahindra and TVS have both also recently announced e-scooter models that are prepared to tackle Indian market from next year.

Finally, there’s the electric bicycle.  Often the butt of many an office joke, the e-cycle is now poised to make a comeback with local startups like Hyderabad based Gayam Motors pushing ahead aggressively to improve range and reduce prices.

Moreover, a flood of Chinese manufacturers have committed a supply to the Indian market over the next 12 months (despite at least 30% import duties). It’s clear that there are real green shoots in India’s electric mobility future.

While at first, claiming that the Indian government should bet the farm on electric may have sounded silly, deeper examination shows that it might not be so far-fetched given the initial momentum that’s getting stronger with each passing day.

On the back of the central government’s recent announcement to push 100% of on-road vehicles electric by 2030, it would now appear to make perfect sense to go all in and run with the leadership mantle globally.

What exactly would this mean for the country?  For starters, it would require a monumental industrial mobilization effort across nearly every state. For the first time since independence, this means that all 29 countries (er…states) must act in unison to help make this ambitious electric ecosystem a reality.

To take the lead globally, it’s essential that the Indian government creates a fertile ecosystem for research, development, and deployment. Rinse, repeat this cycle over a few turns and the makings of a real powerhouse will surely emerge.

While it’s certainly easier said than done, what’s critical here is that the Indian government doesn’t pick winners and losers. But instead provides a clear, transparent long-term policy framework that will allow startups and age old industrial powerhouse companies alike to compete for the consumer’s hearts and minds.

With electric mobility, there’s typically a chicken and egg dilemma around who will build out the charging networks to facilitate the industry at scale. This is flatly an absurd question as the government can easily accommodate this development through a mix of tax credits, right of way easements, and state grants.

All that’s required is a sufficient capping mechanism with appropriate oversight to ensure that there are limits enacted. From there, the industry will do the rest.

Once there’s sufficient momentum in the system after 4-5 years, these initial spark plug incentives will no longer be required. Perhaps the maximum value will come with the research and development that will take place domestically to help build out this EV leviathan.

Unlike many of the phantom jobs getting created today from taxi-aggregators and delivery service providers (95% unskilled), the EV industry will create a litany of new skilled jobs that didn’t exist earlier. Think manufacturing, think servicing, think engineering.

It’s important to realize that it’s not just STEM jobs that will get created. With EVs roaming around cities, there will be a massive new opportunity to redesign many of the country’s decaying urban centers.  Enter the urban planners, artists, designers, etc.

More than anything, EVs represent the stuff of dreams for nearly all Indian politicians. In one fell swoop, they now have the potential to create mass employment to the young voter bank (and largest overall demographic) while also dramatically improving air quality across the country.

Sounds like E and V can, in fact, be the letters of India’s economic rallying cry for the next decade and beyond.

Tags

Delhi China Energy United States Import Tax Japan Consumer India MAHINDRA TATA

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