Indian policy makers have to be pragmatic in their approach while pursuing reforms in key sectors including automobile which is going through tough times, said Volkmar Denner, chairman of Robert Bosch GmbH, one of largest auto-component and heavy machinery makers in the world.
“It’s very important for a country, and its politicians, to set the right targets,” said Denner, who is currently in the country with the company’s entire board of directors for the first time.
The comments are in reference to the ambitious targets set by India with regard to Bharat Stage-VI (BS-VI) emission norms and proposed electric vehicle adoption plan that have left the auto industry gasping.
Original equipment makes (OEMs) from Bajaj to Hero MotoCorp have called the Centre’s timeline for electrifying vehicles “aggressive” and “unrealistic”.
In a recommendation in June 2018, government think tank NITI Aayog had proposed that only electric vehicle should be allowed to sell after 2030, a target the government subsequently scaled down. At present, the intent is to have at least 15 per cent e-vehicles on Indian road by 2023.
According to Denner, the timelines are amiss.
“For two- and three-wheelers, with today’s technology, they can be converted to electric. It is feasible. With respect to passenger vehicles, we recommended to do it in a cautious manner. The electric grid infrastructure may not be able to cope with a higher population of electric vehicle,” said Denner.
“If we talk about 2040 or 2050, I think that is enough time,” he said referring to the timeline when all vehicles on the streets will be electric.
The shift to electric vehicle requires substantial investment by auto makers in upgrading their manufacturing for new models and battery systems. This also has an impact on a string of core and ancillary component manufacturers, including Bosch, and industry supply chain.
Even though major nations are going full-force behind electric vehicles, a complete pull-back from using internal combustion (IC) engines may never happen. According to Denner, about 75 per cent of all vehicles worldwide will still run on IC engines in 2030, while about a-fourth will be powered by batteries. For that reason, Bosch is continuing to invest in new technologies for IC engines to be “as clean and environment friendly as possible.”
However, the slump in Indian auto industry has had an impact on Bosch’s earnings from the region. Revenue and profits at Bosch Ltd, the Indian-listed subsidiary were down 13 per cent and 5.1 per cent in the March quarter, respectively. About 83 per cent of Bosch’s revenue in India comes from the mobility vertical.
“I’m personally disappointed about the current year. I had very big hopes in India, (but) it did not come out to be true (this year), not only in automotive but generally,” said Denner.
According to data from Society of Indian Automobile Manufacturers (SIAM), passenger vehicle sales declined 17 per cent - the highest decline in eight years - in April, while other segments also recoded lower sales.
The slow-down in automobile sales is also slipped over to capital expenditure spends by major manufacturing companies, according to Denner. “Order intake has been substantially reduced compared to a few months ago. It is also an indicator in the machinery industry that business will decline.”