PSR Power Systems Research India Private Limited (PSR India), is the India office of Power Systems Research (PSR). Our experienced analysts, including our team in India, work with OEMs, engine and component manufacturers, dealers, fleet managers and industry experts to compile model-level data that is considered the leading source of global information on engines, drivetrains and powered vehicles and equipment.
The EV segment in India is continuing to grow with additional government support. In July of this year, the government partially modified the Faster Adoption and Manufacturing of Electric Vehicles (FAME) in India Phase II. It has included an additional demand incentive for electric two-wheelers to ₹15,000 per KWh from an earlier uniform subsidy of ₹10,000 per KWh for all EVs, including plug-in hybrids and strong hybrids except buses.
This decision will increase the subsidy for such vehicles by 50% under the FAME II scheme and be a game-changer in adopting EVs.
Such moves from the government will boost faster adoption of EVs. Furthermore, with this kind of solid support, OEMs will also take a step forward to accelerate the mass adoption of EV.
Vehicles will not just be scrapped by their age, but also if they are found to be unfit in automated testing. The vehicle scrappage policy will bring in investments of around INR 10,000 crore to set up 450-500 Automated Testing Stations (ATS) and 60-70 Registered Vehicle Scrapping Facilities (RVSF) across the country.
PSR Analysis: Under the Voluntary Vehicle-Fleet Modernization program (VVMP), the government plans to set up between 450-500 automated vehicle fitness testing stations across India on a public-private partnership (PPP) basis involving private firms and state governments. A total of 60-70 vehicle scrapping centers will also be built; these stations will be situated no further than 150-200 kilometers away from any location in India. A total of seven agencies – including Tata Motors – have signed a Memorandum of Understanding (MoU) with the government today for this project. Tata Motors’ vehicle scrapping center will be set up in Gujarat, will scrap both passenger and commercial vehicles and will have the capacity to recycle up to 36,000 vehicles a year.
The amendments to the FAME-II electric vehicle policy were rolled out in the last month and manufacturers have lauded the efforts in adopting EV mobility in the country.
The government partially modified the Faster Adoption and Manufacturing of Electric Vehicles in India Phase II. Further, it has included an additional demand incentive for electric two-wheelers to ₹15,000 per KWh from an earlier uniform subsidy of ₹10,000 per KWh for all EVs, including plug-in hybrids and strong hybrids except buses.
This decision will increase subsidies for such vehicles by 50% under the FAME II scheme and be a game-changer in adopting EVs.
“COVID-19 cases started spreading in the rural areas with the beginning of the month of May, and agriculture activity in the month of May is bare minimal, particularly land-based activities,” says Niti Aayog Member (Agriculture) Ramesh Chand.
PSR Analysis: The second wave of COVID-19 started spreading in the rural areas in May 2021, but agriculture activities in May are minimal, and are mainly land-based activities. Agri activities peak in March or the middle of April, after which it drops significantly and again peaks with the arrival of monsoon.
Mahindra and Mahindra Ltd (M&M), market leader in the Indian tractor industry, is betting on farm equipment because of increasing demand. The decision is greatly influenced by the healthy agricultural output, record sales for tractors and reverse migration since last year.
PSR Analysis: The company is trying to enter the untapped farm mechanization segment in the country. According to Mr. Hemant Sikka (President Farm Equipment Sector Mahindra) this market has very high potential as India has only 1% share of the global farm equipment market vs. 10% of the global tractor market.
The central government in mid-April announced its long-awaited vehicle scrappage policy. Under the new policy, in case of failure to get a fitness certificate, commercial vehicles will be de-registered after 15 years. Private vehicles will be de-registered after 20 years if found unfit or in case of a failure to renew registration certificates
There are approximately 50 lakh vehicles in India that are older than 20 years, approximately 35 lakh vehicles older than 15 years, and approximately 15 lakh older than 15 years without renewed fitness certificate.
As the industry is coming out from the COVID impact, its growth is hurt by a shortage of semiconductors. Many OEMs have revised the production plans downward due to this shortage. We anticipate the shortage of semiconductors will exist for the next 4-5 months. Though it will hamper monthly production, it will have only a moderate impact on the total year’s production. But If the chip shortage lasts, production cuts could reduce the inventory of vehicles for sale in India and overseas markets.
The issue started in the Q2 2020. Due to COVID-19, auto OEMs worldwide drastically reduced their production and component orders. Concurrently, chipmakers were improving the supply chain, which had been disrupted by COVID-19. They witnessed a spurt in orders from electronics companies for items such as phones, laptops, gaming console makers and witnessed a spike in sales volume during the pandemic caused by changing work and school patterns.
The Union Budget 2021 is very important since it comes during an unprecedented pandemic. The most significant pain points of the economy are the lack of demand and liquidity. The shrinking market’s impact and the weak demand is evident after the Economic Survey said that the country would experience a current account surplus for the first time in 17 years.
The automotive industry is the key stakeholder of the country’s economy. It suffered extensive sluggishness in the past 10-12 quarters after introducing GST, the new safety norms, insurance regulations, axle, and emission norms. These led to a hefty increase in purchase costs. The industry was waiting for direct announcements to reduce purchase cost and improve customer sentiment
Officials at Volkswagen, Ford, Fiat Chrysler, Toyota and Nissan all say they have been hit by the shortage and have been forced to delay production of some models in order to keep other factories running.
A widening global shortage of semiconductors for auto parts is forcing major auto companies to halt or slow vehicle production just as they were recovering from pandemic-related factory shutdowns.
“This is absolutely an industry issue,” Toyota spokesman Scott Vazin said in an email. “We are evaluating the supply constraint of semiconductors and developing countermeasures to minimize the impact to production.”
Kia Motors is expanding its network and targets to reach 300 touchpoints by the end of the year. Further, the company will now focus on expansion in tier-IV and upcountry markets, which will further penetrate the Indian market.
The company is identifying the nerves of Indian customers. It has rightly understood that one of the critical factors in purchasing a car is consumers’ proximity to the brand. Hence, even before the first product (Seltos) launch in the market, it had a wide-spread network in 160 cities with 265 touchpoints.
