Business Standard

Fastag makers gear up as demand soars


Fastag manufactur­ers are busy ramping up their manufactur­ing capacity as financial institutio­ns (FIS) scale up orders in the backdrop of the Reserve Bank of India (RBI) placing restrictio­ns on Paytm Payments Bank.

National Payments Corporatio­n of India (NPCI) has a list of 20 tag suppliers and manufactur­ers for the National Electronic Toll Collection (NETC) project, according to the organisati­on’s website.

Business Standard spoke to four of these players who have been approached by several banks to ramp up production.

Some certified vendors told Business Standard that FIS such as IDFC Bank, Axis Bank, Kotak Mahindra Bank and Airtel Payments Bank, among others, are placing new orders for the tags. This comes as users will be unable to top-up these labels, which are with Paytm Payments Bank after March 15.

According to industry sources, Airtel Payments Bank has placed 5x-7x more orders for Fastag's compared to normal orders.

“Banking institutio­ns are gearing up. They are asking us for more and more Fastag since there will be a need to re-tag these vehicles.

Assuming there are over 10 million Fastags issued by Paytm Payments Bank, those many vehicles may need to be tagged again from players such as HDFC Bank, ICICI Bank, IDFC Bank, Airtel Payments Bank and others,” said a Fastag manufactur­er on condition of anonymity.

“After January, major banks such as IDFC, Axis, Kotak Mahindra, among others have also placed their orders,” a FASTAG manufactur­er said.

Meanwhile, another vendor said that Paytm had stopped accepting deliveries of already manufactur­ed Fastags. This is after the regulator published a directive shutting most of the payment bank’s operations last month.

“Active orders from Paytm have reduced since then. Paytm is also not taking delivery of the Fastags that are manufactur­ed since the RBI order came in. We are in a dire situation since the company has given us orders and we have produced those orders. We could be looking at substantia­l losses if Paytm does not pay us,” the vendor added.

The person has learnt that the company had cancelled all its existing purchase orders for Fastags after January 31. Paytm did not respond to queries sent by Business Standard.

“We have been working with Paytm since the past few years and never had a payment issue with them earlier. They have been regular. Since the RBI has come out with the notificati­on, the company is saying they no longer need the Fastags. The regulator has taken action against Paytm Payments Bank, and not us. Why should we bear the losses?” the person asked.

The company has issued more than 8 million Fastags to date, according to the payments bank’s website.

Manufactur­ers are confident to meet the rising demand for Fastags by different players.

“We currently have the capacity to manufactur­e 500,000-600,000 labels every month. Moreover, a huge number of tag orders are usually placed with different vendors so that supply is not an issue,” one of the manufactur­ers quoted above said.

Another vendor said that Radiofrequ­ency Identifica­tion chips on Fastags are usually imported from Taiwan, European Union (EU) or the US. The vendor said his unit can expand its manufactur­ing capacity by another 20 per cent.

“We can manufactur­e close to 700,000-1 million Fastags every month. This can rise by another 20 per cent if the demand increases. The entire process to replace all Fastags issued by Paytm Payments Bank may take 1.5-3 months,” the person added.

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