Policy Stability Key For Local Capability – EQ Mag Pro
High-profile CEO Elon Musk wants India to slash import duties on cars to make it viable for him to launch Tesla electric vehicles (EVs) here. Import duties in India are generally high, particularly on cars. Ideally, these should be reduced.
However, the current duty structure was put in place as part of a policy to create an electric vehicle manufacturing ecosystem in India, Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME).
Companies have made investments on the basis of policy, including Tata Motors, a vocal opponent of duty cuts. While we would normally argue for lower import duties, on this occasion, that would be the wrong policy. Policy stability and predictability are vital for businesses to take off and grow.
Duties do need to come down and, for that, there must be a clear roadmap made available in advance. Domestic producers and their foreign competitors should both know when the infant-industry protective regime would be lifted and the domestic sector prised open for competition.
Otherwise, front-loading duty cuts would essentially amount to applying policy brakes on indigenisation of the green vehicles and their localisation. South Korean automobile major Hyundai and Germany’s Volkswagen have joined the chorus for duty cuts on EVs.
Nimble Chinese EV makers would join them, too. But it cannot be gainsaid that it is localisation and revved-up domestic production that would drive faster adoption of EVs and make them affordable.
The policy push for EVs, particularly when applied to public transport, will cut back on fossil fuels and their steep import bill, now fast approaching the $100-billion mark annually. In tandem, we need a charging infrastructure and charging-rate schedules to integrate renewable power.
Source: ET Bureau
