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‘GST rationalisation, scrappage policy a must for spectacular growth’: MG Motor India President

Rajeev Chaba, president and MD, MG Motor India, told Sandeep Singh that besides road infrastructure that is speeding at a good pace, the industry needs reforms such as rationalisation of GST and scrappage policy for a strong growth going forward.

Written by Sandeep Singh | New Delhi |
January 31, 2021 1:17:57 am
Rajeev Chaba, MG Motor India President, passenger vehicle segment recovery, automobile sector, economy news, Indian express newsRajeev Chaba

Though the passenger vehicle segment has witnessed a good recovery over last three months, there is a sense that for the growth to continue, the economy has to grow. Rajeev Chaba, president and MD, MG Motor India, told The Indian Express that besides road infrastructure that is speeding at a good pace, the industry needs reforms such as rationalisation of GST and scrappage policy for a strong growth going forward. Having already launched an EV in Indian market, he said the company is working to bring another EV at price point of less than Rs 20 lakh. Edited excerpts:

While the industry has seen growth in the last quarter, do you see it sustaining?

After the pandemic and lockdown the situation was grim. Un-lockdown started in June-July and, by September, the industry started doing fine. By December, enough people started coming to showrooms. While demand rose on account of preference for personal mobility and pent-up demand, these factors can only sustain demand for this quarter (January to March). After that, it has to be more than feel good and individual factors and has to align with the economy. So, in medium to long run it will depend on economy. We all hope that the Budget would be good and the real factors would come into play for the economy.

What is your plan on EVs?

Electric vehicle is a strategic play for us and government is also pushing it. EV was our second product in India. We are not only working on the product side but on the overall ecosystem. We are working with students, startup world and institutions that are pioneering innovation. We are working with enablers to get the game going on technology side.

You will hear more news in future on battery technology in terms of mileage, consistency of mileage, range of 500 km and we are hopeful that we will launch that in 18 months. We are also exploring if we can do a car that is under Rs 20 lakh. We are thinking of a second EV in two years time and also talking of battery assembly and having serious engagement with certain players to do that in India. We are also collaborating on chargers, end of life cycle-battery disposal system, battery mining system (can we have second life of the battery), among others.

There is a border situation with China and it does play on people’s mind. How has it been a challenge for you?

In general, politics is something else. Government comes out with right policies for the country and for sectors where they want investment or don’t want investment. So, that we will leave it to the government and comply with all government guidelines. As far as consumers are concerned, I think that normally consumers don’t go by origin of the country consideration. For them the whole value proposition has to be good. Our brand pillars which hold us in good shape are —technology, customer experience and community diversity. There would always be some customers who would not buy product of a certain country because of their beliefs or biases, or experiences be it China, Japan, Germany or America. What we need to ensure is that our product remains relevant to consumers.

Does this border situation cross your sponsors mind in holding back plans for India?

Overall, obviously, if there is no change … We don’t know about the future because it all depends upon the situation. But, as of now, our cars are doing well and we are receiving good response from consumers and we are able to sell and are expanding. I don’t know about the future, how it will shape up but we are expanding our capacity to up to 1 lakh cars.

Over last five years, we have seen a decline in pace of industry growth. What are the biggest factors impacting it?

Even pre-Covid, 2-3 factors limited the growth auto sector. Automotive sales growth is linked clearly to the country’s economy. Our GDP growth has been pretty average and anaemic and that has been one reason. Second is that the cost of buying kept going up because of various regulations, features and also because of cost of operations as gasoline prices rose. The third factor, I would say is that the big cities like Mumbai, Delhi were not growing at same pace because of shared mobility and consumption peaked and started to decline. These were some reasons that limited the growth of automotive. I don’t expect spectacular growth unless there are big reforms such as rationalisation of GST and scrappage policy, which is a must. The third is the road infrastructure, which is speeding at a good pace. These all could lead to spectacular growth.

You operate in a segment that has been doing well — SUVs. What are the localisation levels you have achieved?

We have three SUVs and they have all been doing well. Now, we plan to launch our fourth product which will also be an SUV. For EV and the Gloster, the volumes are small, but for Hector, which is a volume player, we are at 70-80 per cent depending on model range. We intend to raise localisation by another 8-10 per cent over the next 18 months and we are looking at investing more money in localisation efforts.

We have already committed Rs 3,000 crore and, this year, we should be doing another Rs 1,500 crore for new product, enhancing capacity in the plant and on vendor localisation.

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