A couple of days ago, we read the news of Ola shifting from being a mere ride-hailing company to becoming a two-wheeler original equipment manufacturer (OEM) – it is setting up the world’s largest two-wheeler manufacturing facility in Krishnagiri district in Tamil Nadu. It will make one crore two-wheelers in a year – eventually accounting for 15% of total two-wheeler produced in the world and this 500-acre facility is expected to be operational by 2022.
Hyundai and Kia, who also have manufacturing facilities in the state, are planning to double capacity over the next two or three years and Hyundai plans to set up an EV assembly unit too. Then there is Hero Motocorp, which has also marked its presence in Tamil Nadu through Ather Energy, setting up a unit in Hosur to make 1,10,000 scooters per annum.
Greaves Cotton which acquired e-scooter maker Ampere Electric, is setting up an EV two-wheeler manufacturing facility at Ranipet near Chennai with a capacity to produce 1,00,000 EV two-wheelers.
These big ticket investments apart, there are hundreds of start-ups coming up – right from auto components to ancillaries. Suppliers have started investing big time in green as well as brownfield facilities to service this on-the-verge-of-boom EV industry.
This makes us wonder - why Tamil Nadu? Why not Gujarat, Uttarakhand, Karnataka or Maharashtra which also have EV policies in place?
A few reasons for this:
1: Already an established auto hub
Tamil Nadu is already the “Detroit” of India, what with 45% of total auto exports and 35% of all auto manufacturing coming from this state. Almost every car maker in the country and globally have a factory in Tamil Nadu and that means there is already an established ecosystem for auto makers. Currently, the state has nearly 20 OEMs covering all auto segments, over 350 auto component players and over 4,000 SMEs under Tier-IV. Its installed production capacity is 1.71 million passenger vehicles and 4.82 million two-wheelers every year.
2: Established supplier base
Right from a nut and bolt to the tyres and car seats, everything related to an automobile in made in Tamil Nadu. There is an established set of supplier and more are coming up, many transitioning to meet the EV makers demands. This in itself is reason enough to set base there.
3: Talent pool
The state has some 200 automobile engineering colleges and 800 electronic engineering colleges. This means, for the car makers in the state, there is a steady stream of technical knowledge and skill readily available, which is a major issue in the other states. Also, more importantly, the state is known to have a much peaceful and less agitating labour union force.
4: Big on energy
Apart from providing a steady and uninterrupted power supply, the state is pretty big on Renewable Energy (RE) too. It currently in the number two RE producer at 14,886.32 Mw and number wind energy producer. With plans in place to set up various solar parks across the country, it wont be a surprise to soon see it at number one spot.
5: Investor-friendly EV policy
It has the first mover advantage and none of the states can match what it has to offer. Its EV policy was announced way back in 2019 and the incentives include:
- 100% tax exemption for all EV vehicles
- Full reimbursement of GST paid on the sale of vehicles
- 100% exemption on electricity tax
- Subsidy of 15 to 50% on the cost of land
The other states might wrack their brains and even match up with the EV policy – yet, Tamil Nadu will remain the hub as the other factors simply cannot be matched.
India has set itself the target of 80% of all 2 and 3-wheeler running on the roads being EV by 2030 – ambitious maybe but the only certainty – Tamil Nadu has a big role to make this dream come true.