Franchise Protection Act for auto dealers: FADA
Mumbai: A parliamentary panel headed by Rajya Sabha MP K Keshava Rao has recommended that the government should enact the Franchise Protection Act for automobile dealers in the country, industry body FADA said on Friday.
It said that a “fair competition Franchise Act” will not only be a win-win for both the auto original equipment manufacturers (OEMs) and dealers, but will also be beneficial to customers in the long run, it said. First introduced by the US in the 1980s, many developed countries such as Mexico, Brazil, Russia, China, Indonesia, Malaysia, Japan, Italy and Sweden have such rules in place to protect the franchisees, it said.
The Federation of Automobile Dealers Associations (FADA), which represents around 15,000 auto dealers across the country, in September advocated for the enactment of such a law in the country, after American cult bike manufacturer Harley Davidson announced its exit from India.
“Parliamentary standing committee (PSC) headed by K Keshava Rao has recommended that the government should come out with Franchise Protection Act for auto dealers. “This recommendation was part of suggestions made by the standing committee in its Report Number 303 titled ‘Downturn in Automobile Sector-Its Impact and Measures for Revival’,” FADA said in a statement.
In its report submitted to Rajya Sabha Chairman Venkaiah Naidu last week, the Parliamentary Standing Committee on Commerce said that in the wake of the COVID-19 pandemic and subsequent lockdowns, the automotive industry suffered a loss of Rs 2,300 crore per day, and an estimated job loss in the sector was about 3.45 lakh.
It has also suggested a slew of measures for attracting investment in the automotive sector in the country, including overhauling of prevalent land and labour laws. “I am grateful to the standing committee and specially the chairman, K Keshava Rao, for strongly recommending the Franchise Protection Act for auto dealers,” said FADA President Vinkesh Gulati.
He added that the absence of such a law leads to a tussle in managing dealership operations in various ways, short-terms agreements and non-existence of a clearly defined exit policy. There are various examples where auto manufacturers suddenly announced their exit from India, leaving auto dealers high and dry with their investments going down the drain, he said.
Citing the examples of General Motors India, Man Trucks (a VW Group Company), UM Lohia and Harley Davidson India, the FADA president said franchise laws will actually level the playing field for both large automakers and local dealers.
EV market to hit 63 lakh units per annum mark by 2027
The electric vehicle (EV) market in India is expected to hit over 63 lakh unit mark per annum by 2027, according to a report by India Energy Storage Alliance (IESA).
As per the findings of the report, which covers the present scenario and forecast of electric vehicle (EV), EV batteries and the public charging infrastructure market in the country, demand for the batteries is also going to rise substantially over the same period.
“In the base case scenario, the EV market is expected to grow at CAGR of 44 per cent between 2020-2027 and is expected to hit 6.34-million-unit annual sales by 2027,” the IESA report said. Similarly, the annual battery demand is forecasted to grow at 32 per cent to hit 50GWh by 2027, of this, 40 plus GWh will be on lithium-ion batteries, it added.
“The estimated battery market potential is USD 580 million in 2019 and is forecasted to grow to USD 14.9 billion by 2027,” it noted. The EV sales in India stood at 3.8 lakh units in 2019-20, and the EV battery market stood at 5.4GWh during the year. The electric two-wheelers were the highest selling in the entire segment last fiscal.
As per the report, low and medium-speed electric two-wheelers (up to 40 kmph) with conventional lead-acid batteries were dominating the market. “With more companies getting FAME-II certification in 2020, sale of high-speed electric two-wheelers is expected to increase rapidly,” it added.
In terms of battery technology in the electric two-wheeler segment, lead-acid technology will be completely out of the market in the next five years, it said. Elaborating on the electric bus market the report noted that the demand in the vertical is expected to be driven with subsidy support from the Central government due to high upfront cost.
