Electric Vehicles
The government is preparing a fresh policy for promotion of electric vehicles, which will be rolled out initially on a smaller scale to ensure smoother transition and better cooperation from the automobile sector, a government official said. The policy, advocating minimal subsidies, is likely to be announced at a global e-mobility summit to be inaugurated by Prime Minister Narendra Modi on September 7. According to the fresh proposal, the government will first begin creating favourable ecosystems in nine polluted cities with a population of over four million, and gradually move to cities with populations of one million-plus, the official said. Also, busy corridors such as Mumbai-Pune and DelhiChandigarh are being identified. The government could also consider throwing a 100-day global challenge to automakers for setting up manufacturing facilities for e-vehicles, batteries and charging infrastructure in India, as reported by ET in September last year. In February this year, Union transport minister Nitin Gadkari had announced that the government has dropped plans to prepare a separate policy for electric mobility. “However, a new policy to create favourable ecosystems for transition to electric vehicles is silently being worked upon. The government has already begun consultations with industry bodies, including the Confederation of Indian Industries, FICCI and auto makers on five aspects,” the official said. These include challenges and support required for electric vehicles manufacturing, battery manufacturing, setting up charging infrastructure, promoting electric vehicles in commercial fleet and the role of renewable energy in electric mobility. “There is a shift in the government direction. Rather than spreading it to a pan-India basis, the government now wants to concentrate on creating pilot projects in populated and polluted cities that have a large vehicle base for easy transition. Also, the programme needs to give time to automakers,” said a source privy to the development. The timelines and the roadmap for the policy are being identified but so far the aim remains to shift one-third of the petrol and diesel vehicles to electric fleet by 2030. The Union cabinet is also soon expected to take a call on the 8,730-crore second phase of Faster Adoption And Manufacturing of (Hybrid &) Electric Vehicles in India (Fame India) scheme that proposes fiscal and non-fiscal incentives to electric vehicle firms for five years. The power ministry is close to finalising a policy for electric vehicles charging infrastructure that proposes granting subsidies to PSUs for setting up a basic charging station network in big cities and highways for gaining momentum in electric vehicle sales. Niti Ayog, which is coordinating with various ministries, state governments and stakeholders for the e-mobility policy, will also be seeking comments from the department of heavy industries, the finance ministry, the department of science and technology, the ministry of road transport and highways and the the ministry of urban development.
49% FDI in e-tail inventory is against Press Note 3: RIL & local companies
Reliance Industries Ltd NSE -2.01 % (RIL) has said the proposal to allow 49% foreign investment in online marketplaces that hold inventory and sell directly to consumers contradicts the government’s stated intent to strengthen Press Note 3, which bars any foreign direct investment (FDI) in inventory-based online retail. Concerns about this contradiction were raised by RIL representative at a meeting of the ecommerce think tank, set up by the government, on Monday. “Reliance and all domestic companies said there should be no dilution of Press Note 3,” said a person who was present at the meeting. The draft ecommerce policy was released on Monday. It proposes that foreign investors can own up to 49% in majority Indian-owned and Indian-controlled marketplaces that hold inventory and sell locally manufactured products directly to consumers. The draft policy also states that the government will strengthen the enforcement of Press Note 3 by creating a separate wing in the Enforcement Directorate to handle grievances related to implementation of the provisions of this note. This note allows up to 100% FDI in marketplaces but stipulates that foreign-funded online ecommerce portals cannot hold inventory and sell to consumers directly. “These (the provision to allow 49% FDI and the provision to strengthen Press Note 3) are conflicting clauses,”
said a person aware of the objections raised by Reliance, as allowing foreign investment in inventory holding online marketplaces will result in a dilution of press note 3. The RIL spokesperson did not reply to ET’s e-mailed queries. RIL, which has disrupted the telecom sector with free voice calls and rock-bottom data tariffs, is planning a deeper foray into ecommerce by integrating its retail and digital platforms. “As Reliance transitions to become a technology platform company, we see our biggest growth opportunity in creating a hybrid, online-to offline new ecommerce platform,” said the company’s chairman Mukesh Ambani at its 41st AGM last month. This ecommerce platform will directly pit India’s largest private company against the likes of Walmart, which is taking over Flipkart, and Amazon. Together, Amazon and Flipkart account for over 70 % of India’s ecommerce market. Incidentally, even Amazon and Walmart are opposed to the draft ecommerce policy, but for different reasons as reported by on Wednesday. They feel that the policy is heavily tilted against foreign firms and are likely to ask the US government to reach out to Indian policy makers in case the final policy is not moderated. As they own much more than 49 % in their Indian units, they will be barred from stocking inventory, while their rivals with 49% or less FDI will be able to sell directly to Indian consumers. They are especially wary of the proposed ecommerce regulator because they feel it will intervene in decision making and slow down business operations, resulting in a new kind of ‘Licence Raj’. They are also worried about the provisions that seek to bar bulk purchases of branded goods by related party sellers as well as prevent group companies of ecommerce companies from taking actions that influence or distort the final sale. All these provisions, if accepted, will impact the sales strategies of these companies.
Manufacturing sector activity eases in July amid softer increase in output, new orders: PMI
Manufacturing activity eased marginally in July after reaching a seven-month high in June following lower output growth and new orders, but demand continued to be strong, a private survey showed on Wednesday. The Nikkei India Manufacturing Purchasing Managers’ Index declined to 52.3 in July from 53.1in June. A reading of over 50 on this surveybased index indicates expansion, below that contraction. “The recent improvement in Indian manufacturing conditions lost some impetus in July, with softer rises in output, new orders and employment all recorded,” said Aashna Dodhia, economist at IHS Markit and author of the report. The index is based on a survey conducted among purchasing executives of more than 400 companies. The survey cited anecdotal evidence pointing to favourable market conditions and strong demand from international markets for Indian goods. “The sector continued on a steady expansionary path, as production and new business rose at marked rates. Moreover, July survey data pointed to strong demand from both domestic and international sources,” Dodhia said. Output, new business and exports rose in consumption and intermediate goods. Survey respondents said that steel and crude oil were among the key items whose prices increased but overall, input cost inflation eased from June. The Reserve Bank of India raised key rates on Wednesday by 25 basis points, its’ second after the previous policy announcement in June. Hardening of input price pressures was one of the eight risks to inflation that the bank highlighted on Wednesday, the others being — crude oil, volatility in global financial markets, minimum support price, households' inflation expectations, monsoon, fiscal slippage and revision of house rent allowance. Looking ahead, Indian manufacturing companies held optimistic projections for output in the next 12 months. Expected improvements in demand, promotional activities and expansion plans were the key factors behind confidence. The level of positive sentiment strengthened to a three-month high during July but some respondents expressed fears of a potential slowdown in the year ahead, according to Dodhia.