Top 10 economic and development challenges for India in 2014Culture & Education | February 28, 2014
LSE’s Ruth Kattumuri highlights some economic challenges that are of...
India started out with a transportation handicap. The tight economic controls that bound our first 45 years held back the development of transportation industries and tangled plans for road systems and bridges. In 1991, India’s transformation from a near-closed economy to a fast-changing liberalizer unleashed thrilling economic growth.
With growth came the rise of new wealthy and middle classes, spurring demand for goods and services. Suddenly, corporate India urgently needed better transportation and infrastructure, from freight facilities to public transportation for commuting employees, and the newly prosperous wanted their own two wheelers and vehicles. The Indian automotive industry took off to meet the demands of both businesses and individuals. Today, India is among the fastest growing automotive markets in the world.
The challenge now is to catch our infrastructure up to the demand—and the opportunity is to leapfrog the polluting industrial phase experienced in the Western world. International studies have shown that road transport accounts for 16% of global manmade CO2 emissions. As an automotive company, our responsibility is to manufacture vehicles that provide society with sustainable mobility.
But the challenge in India is more complex than inventing brilliant new technologies. India faces issues in fuel infrastructure, road infrastructure, and price sensitivity. We need to look at these holistically when we design solutions for tomorrow’s world.
One part of the solution is Government legislation to support the nascent sustainable transportation industry. It was only in 1991 that the first stage emission norms came into force for petrol vehicles; norms for diesel vehicles were passed in 1992. Today, we lag EU norms by about four years. We need more urgent regulations to drive improvement—and further incentives to nurture product development.
The Government is already discussing policies for fleet modernization and vehicle inspection and certification with SIAM (Society of Indian Automobile Manufacturers). Government initiatives are also tackling the building and maintenance of better roads. We need to pick up the pace of construction and think creatively about how to address urban-rural connectivity and urban congestion issues.
The Government is also enabling the spread of CNG and LPG infrastructure and offering custom duty benefits for CNG vehicle parts. Many parts manufacturers make CNG/LPG fuel kits so that consumers can choose between diesel or petrol fuels and sustainable fuels. As a result, there are more than 100,000 CNG commercial vehicles in Delhi and Mumbai. In fact, Delhi has the largest number of CNG commercial vehicles running anywhere in the world.
Private companies need to do their part too, both to take full advantage of Government and market opportunities—and to create them. Pressure for positive change from the industries that underpin India’s transformational economic growth can drive pro-environment legislation, increase government attention to infrastructure, and educate consumers about sustainable choices.
Take alternative energy vehicles as an example. Indian companies are investing in technology for hydrogen power-trains and biodiesel, hybrid, and BEV (Battery-operated Electric Vehicle) models. The technology is available—now large-scale adoption depends on affordability, fuel availability, and infrastructure. With the automotive industry eager, the Government is responding with both grants for R&D and incentives for consumers. Battery-operated electric vehicles enjoy a zero excise tax and custom duty, and hybrid vehicles enjoy a lower excise rate of 8%. Departments like the Delhi Government and Ministry of New and Renewable Energy (MNRE) offer consumers’ incentives to purchase of electric vehicles.
But environmentally sustainable mobility won’t become financially sustainable until it is affordable without government subsidies. The best way to protect our planet is to make sustainable mobility affordable and relevant for the average consumer. As an auto manufacturer, it’s our job to help the green movement become a mass movement by putting green transportation options within the reach of all consumers.
What role do you think auto manufacturers should play? Is the government doing enough? Can consumers play a part in solving India’s transportation and infrastructure issues?
About the author:
Pawan Goenka is President of the Automotive and Farm Equipment sectors of the Mahindra Group. He joined Mahindra in 1993, and he has been integral in spearheading the direction of Mahindra and Mahindra Automotive since. In April 2010, Pawan took on new responsibilities in leading the Farm Equipment sector. He holds a Bachelors of Science in Mechanical Engineering from IIT, Kanpur and a PhD from Cornell University, USA. He is also a graduate of the Harvard Business School Advanced Management Program. In 2011, he was named Automotive Man of the Year at the annual NDTV Car & Bike Awards.
Related article: http://rise.mahindra.com/inside-an-international-acquisition/
The views expressed above are those of the author, and not necessarily representative of the views of the Mahindra Group
When first drafting a blueprint, the team called for the use of bricks—but bricks pushed the budget over $400. Scrapping that idea, the team settled on suru wood, bamboo, and FRP (Fiber-glass Reinforced Plastic) sheets – all locally used and widely available in India.
At the age when most boys play cricket, he made toy electric cars from scratch. His passion for electric cars took him to the University of Michigan and thereafter to Stanford University. He returned to India to found the REVAi Electric Car Company in 1994—today, Mahindra Reva. He is widely regarded as the pioneer of electric cars in India.
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