Wheels Of Enterprise


India’s automotive sector is making a paradigm shift to drive into the future

By Nazeer Veliyil

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Published: Thu 26 Jan 2023, 9:00 AM

India, in recent times, has positioned itself to take up a leading role on the back of the promising performance of its many sectors, including automotive.

The Indian automotive industry ranks among the top three largest industries in the world with an annual production of 25.3 million vehicles, significantly above conventional automotive superpowers such as the US (17.5 million vehicles) and the EU (12.6 million vehicles). The sector directly contributes $97 billion to the Indian economy with automobiles contributing $58 billion and the automotive component sector contributing $39 billion. The sector received cumulative equity FDI inflow of about $33.53 billion between April 2000-June 2022. The Government of India has promoted it as a promising sector and expects the automobile sector to attract $8-10 billion in local and foreign investments by 2023. India already enjoys a strong position in the global heavy vehicles market as it is the largest tractor producer, second-largest bus manufacturer, and third-largest heavy trucks manufacturer in the world, according to IBEF reports.

UAE-India Partnership

Home to the largest expat population, comprising more than 3.4 million Indians, the UAE has traditionally enjoyed strong and long-lasting ties with India. These have been through multiple avenues of mutual interest, which have only grown stronger as many Indians have settled here, setting up businesses and explored economic opportunities in the process. In FY 2021-22, the UAE was India’s third largest trade partner, with total non-oil bilateral trade valued at $72.87 billion. The bilateral trade between these two countries is expected to hit $100 billion within five years, following the signing of the Comprehensive Economic Partnership Agreement (CEPA). The CEPA is a vital landmark in the UAE-India relationship, which promises to create better avenues for businesses on both sides and is sure to increase investment opportunities manifold. Initiated last year, the UAE-India startup corridor will help boost tech-enabled startups from both nations to scale their businesses and fortify their position. One of the focus areas will be automotive. At the backdrop of CEPA, India’s automobile exports to the UAE are poised to increase to $160 million in the next five years while engineering exports are seen growing 10 per cent in the first two years and 15 per cent in the next three years at $7 billion, $8 billion and $9.2 billion in FY25, FY26 and FY27, reports suggest.

Rising Demand for Electric Vehicles

A growing trend among motorists has been the popularity for electric vehicles (EVs) in the face of rising fuel costs and a heightened sense of sustainability. Today, EVs enjoy a 0.7 per cent market share in India and by 2027, this figure is expected to increase to 3.8 per cent. To push for the adoption of EVs, India is one of the few countries that support the EV30@30 campaign which aims to increase global market share of EVs to at least 30 per cent by 2030, an IEA report states.

Another success story in this case has been that of Tata Motors, which started early and addressed the initial barriers faced by the industry through leveraging the synergies of the companies which align with the EV ecosystem to their strengths. N. Chandrasekaran, Chairman, Tata Sons, echoing the global aspirations of the brand, said: “Our aspiration is not only to make batteries for Tata companies, but also for the global market.”

Boost to Green Hydrogen

Taking more inspiration from the home brand Tata Motors, I would like to quote Praveer Sinha, CEO and Managing Director at Tata Power, who reiterated: “We are on a journey where we see a humongous opportunity, especially in the renewable business. Whatever we are doing in India is just the tip of the iceberg.”

India’s aggressive climate goal of Net-Zero by 2070 calls for rapid transformation of our primarily fossil-dependent economy to 100 per cent renewable over the next five decades. The National Hydrogen Mission, which was launched in 2021, is slated to create an ecosystem for the production of green hydrogen.

As India’s primary energy demand is expected to double to 1,123 million tonnes of oil equivalent by 2040, the country needs to switch to less climate-polluting alternatives. The good news is that the country possesses 1.37 trillion cubic metres of natural gas reserves, enough to meet half the demand till 2050. To help reduce its dependence on fossil fuels and cut imports, India has recently signed a Memorandum of Understanding with the UAE on green hydrogen development and investment. The move will help India in its green hydrogen programme as the UAE possesses cutting-edge knowledge and methodologies in the area. The step is in line with India’s National Green Hydrogen Mission.

Road Ahead

With India assuming the Presidency of the G20 and the 13th assembly of the International Renewable Energy Agency (IRENA) respectively, the nation is geared to following its goals. A 14-member delegation from the Confederation of Indian Industry (CII), which participated in the 13th IRENA assembly from January 13 to 15 in Abu Dhabi, said that the Indian presidency of IRENA will further the country’s leadership in sustainability efforts.

A Shining Example

In the automotive sector in the UAE, BorgRollsWarner (BRW) is a brand that is respected industry-wide for quality parts for the commercial vehicle industry. With a focus on truck, trailer, light commercial vehicles (LCV), public service vehicles (PSV) and other specialist applications, BRW has established itself as one of the top aftermarket suppliers for commercial vehicle components. BRW maintains a high level of service, with maximum possible levels of availability coupled to an excellent range of OEM quality products.

In this regard, BRW products meet the quality certification from ISO 9001 - 2008, ISO 9002 – QS900 and ISO/TS/16949:2002, which reflects its commitment to quality and service. All BRW products are equivalent to OEM quality products and this has helped BRW to be recognised by leading companies as well as customers from all over the globe.

Nazeer Veliyil is Group Chairman and Managing Director at BorgRollsWarner Middle East LLC

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