Tuesday, 23 May 2017

Will Tesla follow Apple ?



In a tweet , 2 days back , Elon Musk had expressed reservations re setting up of a EV manufacturing plant in India



He had presumed that such a plant would have to source , at least 30 % of the components locally – a condition , which he felt , was difficult to comply with



Yesterday , DIPP  has clarified ( of course , in a “ tweet “ for “ tweet “ fashion ! ) that , for setting up a local manufacturing plant , there is no such condition



What that tweet did not say :

Tesla is welcome to import any and all the components that it wants to – of course , after paying the applicable “ import duty “ – like all other foreign car manufacturers who have set up manufacturing operations in India , over the last 15 years



Now , ordinary mortals like me felt that this “ omission “ was due to the 140 characters limitations of a tweet !



But who could have suspected that the  REAL REASON  for this omission could have well been, today’s following announcement ?



“ GOVT READY TO OFFER APPLE , TAX SOPS IF IT MAKES MORE IN INDIA “



Economic Times provides following highlights :


·         Government agrees with Apple that some of the components that go into its products can’t be immediately manufactured in India


·         Govt has made a list of products that can be imported duty free till they are ready to be made locally


·         Govt has defined different components that will be ready to be made locally over the next three, five or seven years




Eco Times quotes , Aruna Sundararajan , Sec , Ministry of Electronics & IT as follows :


Apple’s road map is slightly different ( from ours ) and we are looking at harmonizing it


If they agree, then they don’t need any special concessions because then they will be falling in line with our manufacturing plan “



Govt has proposed to Apple , the following Phased Manufacturing Program ( PMP ) :


2017-18  :
Mechanics , Die-cast parts, Microphone and Receiver , Key Pad and USB cable



2018-19  :
Populated Printed Circuit Boards, Camera Modules, and Connectors



2019-20  :
Display Assembly, Touch Panels , Vibrator Motor and Ringer





Nothing revolutionary here to anyone who applied for an Industrial Manufacturing License , around 1970  !



At that time , one was required to submit a PMP , along with the IL Application



And , even provide the figures of increasing “ local content ( by value ) “ in the selling price of the product proposed to be manufactured locally ( indigenization  )



And even provide , figures of “ Anticipated Value “ of Import Licenses required for each phase ! And provide figures for components imported and products made / sold , each year !



One only hopes that what Govt proposes to Apple is made “ public “ on DIPP web site so that there is ,


·         Total transparency


·         No ambiguity  (  no scope for arbitrariness  / discretion  )


·         Absolute clarity



And if an identical policy frame work is prepared – and made public on DIPP web site – in respect of Electric Vehicles , there would be no need for Elon Musk to tweet ( his apprehensions ) , nor any need for a tweeted response !



-------------------------------------------------------------------------------------------


Dear Elon :



For immediate approval ( in 24 hours ) , pl submit your PMP as follows :



2017-18  :
Set up factory next to Mundra Port ( Gujarat ) to facilitate world-wide exports



2018-19  :
Source locally , Tyres / Chasis / Body / Electricals  / Windows / Dashboards ..etc



2019-20   :
Manufacture in your own factory , Li-ion Battery  / Wall-mounted Powerpack Storages /
Solar Roof Tiles



2020-21  :
Manufacture  RFID Sensors - Cameras – GPS locators



2021-22   :
Augmented Reality  Devices  /  Autonomous Navigation Devices ( Radar – Lidar  )





Now , it is very possible that neither Shri Gadkariji , nor Shri Goyalji , would be satisfied with such a slow PMP , spread out over a period of 5 years



They may , well request  Elon to cut it down to 3 years



And , if they do, I get a feeling that Elon would telescope the entire PMP , in 2 YEARS !



After all , Elon is the biggest proponent of :









24  May  2017



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