11 July, 2020
Ownership in Logistics: Newer Opportunities for India in a post-COVID World
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Author: Mr. Shailesh Chandra, Managing Director, Tata Motors Passenger Vehicles Ltd and Tata Passenger Electric Mobility
The Union budget for FY25 demonstrates the nation’s outlook toward inclusive, tech-focused and sustainable growth, in line with the Government’s long-term vision of Viksit Bharat. Many of the key priorities identified in the budget, such as promoting skill development, driving employment and inclusivity, accelerating infrastructure development, energy security, fostering innovation, will act as catalysts for sustainable growth across manufacturing industries, including the automotive sector.
The growth-focused budget signals a clear intent to strengthen the economy, which will result in a stronger middle class, whose aspirations will be a key driver of growth for the automotive industry. The government has ensured that the opportunity to drive energy transition and green mobility is well captured with several key policy initiatives.
Strong support for Accessible E-Mobility
The Auto PLI outlay at Rs. 3,500 Cr. in FY25 is nearly a 6X increase over the Rs. 604 Cr. allocated last year. The Auto PLI is a key instrument to bridge scale gaps in the e-mobility value chain in India, and will drive investments in EVs and EV components as well as make EVs more affordable for customers. In addition, the exemption of customs duty on imports of lithium, cobalt, and other rare minerals, plus the extension of concessional customs duty on Li-Ion cells until March 2026, will support in increasing accessibility of EVs.
Driving Jobs in EV Manufacturing
The increased PLI allocation also underscores the government’s continuing commitment to building an ‘Atmanirbhar Bharat’ and its thrust on manufacturing with ‘Make in India for the World’ by creating a global hub for manufacturing EVs. We expect that exponential increase in PLI funds will go towards creating jobs of the future in EV and EV component manufacturing, as well as downstream services in the EV value chain.
The schemes announced under the Prime Minister’s package incentivize job creation in the manufacturing sector, through wage benefits for new workforce entrants and employer support for additional employment. In addition, internship programs for 1 crore youth will incentivize players across the automotive ecosystem in skilling of employees in new technology areas, including EV component manufacturing and EV service, thereby bridging key skill gaps in the country.
Boosting MSMEs
Several new initiatives have been announced to further improve the ease of doing business, especially for the MSME sector. The new credit guarantee scheme announced for them has the potential to transform MSMEs, often constrained by capital, to scale and modernize. The development of industrial parks offering a ‘plug and play’ mode will reduce the lag between planning and execution. These initiatives will benefit auto component manufacturers and other MSMEs by providing them with an excellent opportunity to invest in the right technologies, state-of-the-art machinery, and equipment, enhance operational efficiency, and improve market positioning.
Emphasis on Green Energy Transition
The Union budget has ensured a strong focus towards the government’s vision of accelerating energy transition and supporting Net Zero. The PM Surya Ghar Muft Bijli Yojna, with over 1.28 crore registrations and 14 lakh applications, and the exemption of customs duties on capital goods used for the manufacture of solar cells and panels in the country will further reduce the cost of procuring solar panels.
Driving installation of solar panels across the country will accelerate distributed generation, thereby reducing the need for grid investments, and reduce the dependence on non-renewable energy for domestic use. In addition, ubiquitous rooftop solar installations will naturally create an opportunity for zero-cost, zero-emissions mobility, when paired with EVs. The focus on e-mobility and rooftop solar systems taken together show an accessible path towards Net Zero as well as elimination of oil imports.
In addition, the Government has earmarked an impressive capital expenditure of over Rs. 11 lac Cr., equivalent to 3.4% of the GDP, which will further accelerate the pace of infrastructure growth across the country, which is a key enabler for mobility.
The series of progressive announcements made in the union budget FY25 are set to deliver strong growth with sustainability for the nation. The specific support for green mobility and energy transition makes this a constructive budget for accelerating India’s journey towards becoming a leader in sustainable manufacturing and a global hub for producing EVs.
Being proudly ‘Vocal for Local’ and committed to making mobility emission-free, we look forward to the effective implementation of this budget for the holistic and sustainable growth of the country.
Published: 24 July 2024 | Business Standard
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