India at 75: The growing EVolution in auto industry | The Financial Express

India at 75: The growing EVolution in auto industry

The automotive sector is such a behemoth that it accounted for 8 percent of India’s GDP in 2020, and it recorded a phenomenal 15.5 percent growth (its highest ever) in FY2022.

India at 75: The growing EVolution in auto industry
In fact, as soon as 2025, around one-third of all vehicle manufacturers will abandon internal combustion engines in favour of going electric, or at the very least hybrid, with that figure rising to 40% by 2040.

By Naveen Munjal

Seventy-five years of independence in India marks a major milestone for us as a country. In this period, we’ve witnessed tremendous change and incredible growth. From being nowhere on the map to a force to be reckoned with, India has, indeed, come a very long way. It’s a journey that has seen major milestones ticked off the list, incredible feats of perseverance and ingenuity, and seemingly endless changes in the name of progress.

Today, India is a force to be reckoned with on the global stage. Our population, burgeoning though it may be at nearly 1.4 billion, has a literacy rate of 77.7 percent, which is remarkable once you consider that just 75 years ago, that figure stood at a paltry 12 percent. Our GDP is growing at a rate of 8.7 percent, with the occasional high of over 10 percent not out of the ordinary. 

These impressive numbers aren’t just down to pure luck. As a population, we’re far more connected and able to conduct our lives more efficiently than what we were capable of earlier. There’s no singular reason for this, but a big proportion of the credit must go towards the fact that we have ensured that the penetration of electricity, even well into rural areas, has been relentless.

It may seem like an issue to take for granted for some of us, but its importance cannot be underestimated. It has given people far and wide the ability to access the internet and access global information like never before, which has revolutionized the way we go about our daily lives. In fact, it’s estimated that there will be 840 million total internet users (about 60% of our population) by the end of 2022, which is a figure that’s up massively from 357 million users even as recently as 2017.

Over and above that, India has also seen a sharp change in the services sector with IT companies leading in global deals. The sector is such a behemoth that it accounted for 8 percent of India’s GDP in 2020, and it recorded a phenomenal 15.5 percent growth (its highest ever) in FY2022.

Indians aren’t shy about regularly featuring at the top of the world’s richest lists, either, and there’s absolutely no shortage of Indian CEOs spearheading multinational corporations that affect billions of lives each day, too.

Looking back, it’s hard to pinpoint only a few cornerstones and put our progress down solely to them. That said, there certainly have been some milestones that have stood out.

For a start, thanks to numerous advancements in science and technology and its applications, the life expectancy of the average Indian has shot up considerably. Back in 1947, it was disturbingly low at about 32 years. With a steady stream of advancements in medicine, however, that figure now stands at a very respectable 70 years in 2022.

But it’s not just in science and technology that we’ve made strides. There was a point in time when our limited road infrastructure played host to only imported vehicles, and only in small numbers to boot. Gradually and assuredly, however, we gained traction, accumulated wealth, and persevered, with independence in 1947 no doubt giving a fillip to a now-thriving automotive industry.

In fact, post-1947, the Government of India and the private sector jointly launched efforts to create an automotive component manufacturing industry to supply the automobile industry. By 1953, an import substitution program was launched, and finally, the import of fully built-up cars began to be restricted. At the turn of the ‘60s, many two-wheeler manufacturers were granted licenses to trade in the Indian market, thereby putting in place the foundations for a massive boom in the automobile industry.

Fast forward a bit and by the year 2000, in line with international standards to reduce vehicular pollution, the central government unveiled standards to be followed by every manufacturer. Known as the Bharat Stage emission norms, it set India up on the path of stringent pollution control, more or less on par with European emission standards. In fact, the last one – BS 6 standards were even ahead of their European counterparts!

However, a more pressing concern in recent times has been climate change and the role played by the private sector in mitigating it. With dwindling resources, there is a pressing need to reduce emissions and increase efficiency in raw material utilization in the automotive sector. Environmental, social, and governance (ESG) factors have therefore become areas of strategic importance for companies in this sector. There is an urgent need to adopt a more sustainable method, not just in terms of propulsion, but in terms of its entire ecosystem. 

As such, this narrative sets the scene up quite well for the next phase of our growth. Our dependence on crude oil and the damage it has created to the environment is the basis for this narrative, and in an attempt to prevent permanent damage, a drastic switch toward renewable energy is the need of the hour. This ushers in the era of the electric vehicle, be it public or private transport, and it’s all in favour of the commitment we’ve made towards a net-zero emissions economy by the year 2070.

Keeping aside other industries for a moment, the mobility sector plays a big role in this regard. Announcements the world over have indicated that a majority of vehicle manufacturers have firm plans in place to switch to electric mobility. In fact, as soon as 2025, around one-third of all vehicle manufacturers will abandon internal combustion engines in favour of going electric, or at the very least hybrid, with that figure rising to 40 percent by 2040.

Closer home, India’s rate of electric vehicle adoption has surpassed most predictions. Consumers are flocking to EVs in a big way, leaving support structures to play catch up like charging infrastructures and renewable energy production. This is especially true for electric two- and three-wheelers, where Hero Electric, India’s leading two-wheeler EV manufacturer has been pushing the needle for a decade and a half now.

Also read: Hero Electric tops July EV sales chart, Ather and Ola see sharp drop

The fact of the matter is that the writing is already on the wall. We need to move to cleaner forms of not just transport, but every other sector as well. On the plus side, we have everything in place — an educated workforce that’s hungry and eager to progress, a nuanced skill set that will allow us to develop the right kind of technologies and practices to ensure that we’re on the right path, and a bustling population to ensure that once it’s implemented effectively, it will have a rousing effect on the global issue of climate change. We owe it to our country’s well-being and the next generation to ensure that this dream becomes a reality.

In order to implement such a radical shift in thought, as a country, we will need to lean heavily on our government to keep us on the right path. This entails coming up with decisive and clear-cut policies that will foster progress and allow us to hit our ultimate goal of being a net-zero emissions economy by 2070.

As it stands, the way forward is electric, but the big caveat is that we’re not at the end of the road in that journey. We also need to develop a sustainable way to power electric vehicles, otherwise, it will be a job half done. Conversely, with a breakthrough in place, we could also be looking at hydrogen fuel cell technology as a primary source of propulsion in the near future. Truth be told, there are still a few more methods that could appeal as well, but the case in point needs to be that regardless of which route we take to achieve the net-zero status, India’s goal needs to be that it should be a leading player on the global map when it comes to zero emissions. 

The positives of India at 75 are that we’re in a good, stable condition. We have got strong leadership, and a positive image in the international markets, and India is seen the world over as one of the countries where there is relative ease to conducting business.

That said, there is no shying away from the fact that there is a lot of work to be done. The early EV adoption rate might have surprised most, but its penetration is still very low as compared to its internal combustion-engine counterparts. The opportunity this presents is tremendous with regard to India becoming a global hub for EV production in the near future. To achieve this, there is an urgent need for investment and policy support that can facilitate the development of indigenous technologies to enable domestic sourcing of raw materials. 

Achieving India’s ambitious net zero targets necessitates decarbonisation of the power grid while simultaneously ensuring high efficiency and minimum losses in energy generation and distribution. As mentioned earlier, our road infrastructure, too, needs a push towards being globally recognized as top-notch.

What’s undeniably encouraging is the fact that these are all hurdles that we can overcome quite easily given the right push, as long as it’s a concerted, cohesive effort on behalf of everyone involved in one direction. The end goal of living in a cleaner world, not to mention leaving behind a better world for the coming generations, should be the common goal we all strive towards. Given the right push and the collective determination of 1.4 billion people, there’s absolutely no reason to believe that that dream cannot turn into a reality!

The author is Naveen Munjal, Managing Director, Hero Electric

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First published on: 22-08-2022 at 13:39 IST