India needs to have a stable set of policies and a regulator in EV sector: Sanjeev Sharma, MD, ABB India

Having a presence in the transport, infrastructure, renewables and the utility space, the Indian arm of Swiss capital goods company ABB is in a sweet spot. ABB India is also closely associated with the electric vehicles (EV) programme in the country. In an interview, managing director Sanjeev Sharma tells Vatsala Gaur and Satish John that India needs a stable set of policies and a regulatory authority in the EV sector as the automobile industry prepares to make a huge shift in terms of manufacturing and charging standards as well as on how power is bought and sold. Edited excerpts:

Is ABB in a sweet spot in India, with the government announcing several programmes where your company has an edge?
ABB’s focus is in three distinct segments. One is utility upgrades, renewables and smart transmission network where a lot of investment has gone in with ABB having localised most of the technology. Our second focus area is industrials and we see a big opportunity because in India, anything that we produce consumes 30% more energy as compared to any benchmark outside India, which means there is a lot of scope for energy optimisation and technology.

The third area is transportation and infrastructure where the growth is strong and we foresee more to come there because the cycle in that segment has just begun. All these elements are the global focus areas for ABB and they are the same in India — but in India, it is more relevant because of the stage of the growth curve as compared to the developed markets which have matured. Added to that, digitalisation cuts across all the other three divisions.

We are engaging with our established customers in this area and their interest is pretty high. We are also servicing our global units from our R&D centres in Bengaluru and Chennai for digital knowhow. Digitalisation is also the new proposition for ABB to attract customers.

Is ABB localising technologies to make them affordable in India to compete with peers from India and China?
The (transmission-line) project that we are about to finish that started four years ago, North-East Agra, the global content was much higher than local content. In the Raigarh-Pugalur HVDC (high-voltage, direct current) project that we have acquired last year, two-thirds of the technology will be manufactured in India. So what used to be produced in Sweden, will be produced locally. Not only soft elements like design will be carried out in the country, but also the production of large equipment like transformers, switchgears, etc., which were not done before, is localised which also makes us more competitive as you have to win it against competitive bidding. So, this localisation is a kind of a second nature for us to compete in a very highly competitive market like India. In some places, localisation is as high as 98%. This has brought down the cost. In the solar power space, we have the highest market share in the area of solar inverters in India due to localising and improving technology to bring down the cost to suit the players that are associated with setting up solar infrastructure in the country. In wind energy, too, OEMs (original equipment manufacturers) buy the wind generators which are produced in Vadodara. Our global strategy is that if there is a demand, we localise to meet it.

What will be ABB’s role in India’s Electric Vehicle transition?
The demand in India still has to pick up, but we are ahead of the curve there. We have already gone into ABB Formula E (all-electric) car racing because we know that the world is moving towards it.

The core technology for solar inverters, or traction inverters for railways, or energy-efficiency technologies for drives as well as for EV charging, is the same and we have localised it. So, getting into EV charging is the same technology with the only difference that it has to be delivered to a different market segment where the dynamics of the customer will be different. The ABB fast charger is being used by all Indian and global OEMs to test their vehicles.

We have the complete portfolio of technologies. But India will also have a special segment, which is for two-wheeler and three-wheelers, which is a very basic charging station, wherein ABB does not have a presence.

In the buses segment, we have tried different technologies and implemented them in different cities, but it is unclear right now what direction India will take.

The automobile world is moving towards EVs, thanks to the governments prodding by setting deadlines. Is there more the government can do to make it a smooth transition?
You need to have a stable set of policies. A lot of announcements have been made but the stable policy formation, both on the commercial and design part of it, needs more attention. Here, some forces ask you to adopt the global technology, bring it in, localise it and scale it up like in the case of mobile technology and solar technology, but then there is a second thought going here wherein people have the opinion that we will do a very India-specific solution with either fast charging with batteries mounted in the cars and buses or using removable cassettes. Thirdly, India perhaps needs a regulatory or a design institute which actually defines the standard for this new area that you are entering, because you are making such a huge shift in terms of manufacturing standards, charging standard and how power will be bought and sold.

Will falling solar and wind energy tariffs affect the profitability of operators?
I think there have been instances of reverse auctions … where you become the lowest bidder, and then they take three lowest bidders again and make them compete again till somebody comes down to the lowest point. This kind of practice accelerates the price erosion in the market segment and leads to NPAs. It’s not a natural phenomenon to allow the segment to correct itself over time like it did in mobile telephony. But in my opinion, it is a temporary phenomenon and the PV (photovoltaic) prices are rising across the globe and the prices will correct themselves.

Is ABB’s structure any different from other MNCs who have several wholly owned subsidiaries operating in India?
We keep our structure simple as then managing the company and creating value for shareholders becomes easier. In India, we have two entities, one is listed and that is where the manufacturing and delivery to our external customers take place. Then we have the global business centre wherein we deliver services to all countries — whether it’s backend services or high-level value services — in key function areas like HR, finance and supply chain management. We also deliver a lot of engineering services to all the projects happening globally which we call operations centres, and then we have the development centres which develop the products and solutions for our global units. We also have a research centre in Bengaluru and now digitalisation. So these four-five pieces, which are global in nature, which also deliver value to India … are 100% wholly owned entities of ABB. All the customer-oriented business is 100% catered by the listed company.

Source: economictimes.indiatimes