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German Auto Major Looks To India’s EV Market, To Invest €120 Mn In The Country

German Auto Major Looks To India’s EV Market, To Invest €120 Mn In The Country

The company is looking to provide India specific emobility solutions through this new unit

The company committed to invest about €120 Mn in India

It is looking to develop capabilities for mechatronics and software in the country to support its emobility needs

In line with the government’s aim to boost emobility in India, Germany-based automotive components manufacturer Schaeffler Group is reportedly planning set up a local electric vehicles engineering unit in India to meet the growing needs of the domestic players.

According to reports, through this new unit, the company will be providing India-specific emobility solutions. Dharmesh Arora, president and CEO, Schaeffler India, reportedly said that the company is looking to build capabilities for mechatronics and software in the country which will eventually meet the emobility needs of global Schaeffler.

Currently, the group operates in India by acting as a hub for cost effective solutions for two-wheelers and tractors.

This announcement comes in after reports from October 2015 showed that the company had committed to invest about €120 Mn (INR 983 Cr) in the Indian market to strengthen its footprint in the country.

In order to meet the growing demands on the electric vehicles segment and the government’s focus on making India pollution free, many of the international companies are looking to foray into the market.

In 2017, Germany-based automotive component maker Bosch had also announced its plans to provide electric-vehicle solutions through its manufacturing and engineering unit in India.

Also in order to encourage international companies to assemble electric vehicles in India, the central government reduced customs duty on EV components which are imported in a knocked-down or semi knocked down state to 10%-15% from the existing 15% to 30%.

In a bid to tap the growing market, international carmakers are also looking to launch their products in the country. This month, reports suggested that South Korea-based carmaker, Hyundai plans to begin manufacturing its Kona electric SUV at its Chennai factory by the second half of 2019. At the same time, Japan-based Nissan and China-based Kia will also be introducing their electric cars in India, this year.

EV Players Wait For Govt Clarity

As the growing potential electric vehicle market continues to draw attention from foreign companies, lack of a proper electric vehicle policy and framework may be a reason for slower growth and may also discourage some of the companies to invest in the Indian market.

In April 2018, Honda had said that introducing electric vehicles in India is an issue as there is a lack of a clear electric vehicle policy framework.

Also as the government mulls over electric vehicle policy and second chapter of the Faster Adoption and Manufacture of (Hybrid and) Electric Vehicles (FAME) scheme, the first phase of the scheme is scheduled to end by March this year.

While presenting the interim budget 2019, interim finance minister Piyush Goyal made no clarifications regarding the release of the policy framework. Further, no new incentives or scheme was announced during the budget.

This ambiguity in the sector may eventually cause the foreign players to be sceptical about the Indian market and may dissuade them to focus on India.

[The development was reported by ET]