Auto companies, component makers' synergy to help India’s EV sector grow: SIAM DG Menon

EV push by industry:  A subdued performance of small cars seen in FY24 and a considerably upbeat performance of sports utility vehicles (SUVs) along with robust two-wheeler sales in rural markets is setting the tone for the performance of India’s automobile sector in FY25. In an interview with Republic Business, Rajesh Menon, Director General, Society of Indian Automobile Manufacturers Association (SIAM) says SIAM along with auto component manufacturers have also drawn up a roadmap for increasing localisation in India which would help in boosting manufacturing at Tier-1 and Tier-2 levels and would reduce the dependence of OEMs on imports.

RB: How have SUVs witnessed a more healthy sales performance as compared to small cars? 

Rajesh Menon: There has been a major shift in the demand of passenger vehicles. The consumer preference now is more tilted towards utility vehicles (UVs) which have more space and higher seating posture a commanding road presence, which aligns with the preferences of many consumers seeking versatility and practicality in their vehicles. It is also the way how people in both urban and non-urban centres have a desire to shift  to a bigger and better vehicle. 
Automobile manufacturers keep on introducing new models of UVs. These vehicle models often come equipped with advanced features, appealing designs, and enhanced performance, attracting consumers looking for spacious and versatile vehicles.
A robust economic growth and improved macroeconomic scenario are contributing to the growing demand for UVs. The  disposable incomes in the country have seen a rise and consumer confidence has improved, individuals are more inclined to invest in bigger vehicles that offer more comfort and utility.
Car makers have ramped up production of UVs in response to the increasing demand in the market. Look at the way some of the UV makers have this segment contributing the bulk of their revenues. 
While we have seen lower offtake of entry-level passenger cars as new regulatory requirements in the recent past have resulted in a higher ratio of price increase of small cars compared to its overall price of the vehicle, impacting the consumers of this price bracket. There has also been a shift in the consumer preference for Passenger Vehicles with additional features which is leading to migration to bigger vehicles.  It is also perceived that the consumers of the entry-level segment are looking at used vehicles that they can acquire at similar price points but with additional features.

RB: What is your take on charging infrastructure for electric mobility and EV penetration in India?

Rajesh Menon: As far as the electric mobility ecosystem is considered, the automobile industry in our country has been witnessing a paradigm shift.  It is steadfastly progressing towards sustainability, aligning with the decarbonisation targets set by the Indian government. India's transition to e-mobility is gaining momentum, and as the economy continues to expand, EV adoption will follow suit. 
The share of EV Passenger Vehicles in 2023-24 doubled from 2022-23 levels. With the all-round support of central government through lower GST, FAME incentives, PLI Schemes and incentives to manufacturers, it is envisaged that EV penetration would continue to grow.
The government is also focussed in creating robust Charging infrastructure and a lot of ground has been created. This coupled with higher drive range of EVs is addressing the range anxiety of the consumers. As estimated by the Government of India, Auto Industry is working towards achieving the 9-11 per cent EV share in new passenger vehicles by the year 2030.

RB: As an association what is SIAM doing to provide a boost to India's auto sector?

Rajesh Menon: During the last few years,  SIAM has been engaging with the government, including with the state governments and other stakeholders to create a conducive environment for the manufacturing of vehicles in India. We have been regularly submitting recommendations with the government for enhancing the ease of doing business in India, which not only helps in increasing the efficiency of manufacturers in India but also encourages global companies to set up bases in India.
SIAM along with auto component manufacturers have also drawn up a roadmap for increasing localisation in India which would help in boosting manufacturing at Tier 1 and Tier 2 levels and would reduce the dependence of OEMs on imports. As an association, SIAM is dedicated to supporting the sustainable development of the Indian automobile industry, with the vision of positioning India as a global leader in automobile design and manufacturing. Aligned with the Government of India’s vision, SIAM has introduced several key initiatives aimed at boosting the auto sector:

Biofuels: Through the ‘Javik Pahal’ campaign, SIAM promotes the use of biofuels derived from renewable biological materials. 

Electrification: Under the ‘Vidyutikaran’ initiative, SIAM promotes the adoption of electric and hybrid technologies as alternatives to fossil fuels.Recycling and Circular Economy: The ‘Chakriyata’ initiative focuses on recycling and promoting a circular economy to minimise waste and ensure sustainable resource usage.