Nitin Gadkari's threat of bull-dozing the industry is ill-conceived, and adds to the considerable uncertainty in the sector
Apart from reinforcing his can-do image, it is not clear why roads minister Nitin Gadkari chose to strong-arm the auto sector at the SIAM annual convention, threatening to ‘bulldoze’ manufacturers if they did not quickly start rolling out electric cars or those that ran on alternate fuels like ethanol. It clearly rattled the industry, coming as it did on the back of several flip-flops due to either government or court action over the recent past – ironically, at the same convention, Niti Aayog CEO Amitabh Kant agreed with industry that the policy regime had to be both clear and consistent. Gadkari’s desire to reduce both imports of crude oil as well as pollution suggest his heart is in the right place, but as long as automobile manufacturers are adhering to the law – it is legal to produce both petrol and diesel cars – threatening them is hardly the solution. Indeed, in even the United States which is at the frontier of electric cars, the pace of change is not quite clear as of now – does Gadkari seriously expect established manufacturers to junk their production lines and rapidly switch to a technology that is still evolving, even if at a fast pace?
— ANI (@ANI) September 7, 2017
If Gadkari wanted industry to quicken the pace towards clean cars, surely the more sensible path would be to clearly lay out the government’s plans to, for instance, develop charging stations across the country – even a shift from BS-III to BS-IV is preceded by a plan to get refineries to produce the fuel in keeping with the shift in production schedules. Indeed, given the costs involved in redesigning/redeveloping their production, Gadkari needed to have come up with a clear schedule of incentives, including the likely tax policy – this required a detailed discussion paper, interaction with industry on what it needs for the switchover including getting component suppliers ready, and, finally, a buy-in from major participants like the finance, power and petroleum ministries. If the new-generation cars are going to be running on electricity generated using dirty coal, for instance, it is not quite clear whether the net benefit to the environment is going to be worth it – while switching the entire automobile fleet to electric vehicles sounds good, can the electricity grid handle the switch and over what period of time? The minister’s outburst now needs to be matched with realistic timelines after discussion with all stakeholders and understanding of their needs. Anything less than that will just reinforce the view that India remains an unpredictable place to do business – recall the ongoing back-and-forth over taxes/cesses on large automobiles. That’s the last thing the government wants given its desire to push Make-in-India and the critical role of the automobile industry in this.