In a previous post, we reviewed some unique challenges and opportunities Indian Bicycle Industry, from an article by Mr. Pankaj Munjal, Chairman and Managing Director, HMC, A Hero Motors Company. Here in this post let’s review what exactly is the Indian cycling industry seeking from India’s 2022 Budget to boost growth – the Cycling Push Package, .
To tackle some of the challenges we discussed in the last post, and to capitalize on the highlighted opportunities, a one-time package to the Indian bicycle sector in the 2022 India Budget, would enable the sector to register revolutionary growth and help catapult into the hi-end bicycle era. Here are components of the “Cycling-Push” package sought by the industry
“Cycling-Push” Goal
To position the Indian Bicycle sector @ 2.0 level while achieving 3x growth by 2030 (i.e., $3.51 billion) in high value-added bicycles – premium pedal and electric. This goes with generating employment at the rate of 3.3 per 100 bicycles in the supply chain and also accrues additional Govt revenue and stimulating boom in allied services.
Specific Asks of the “Cycling-Push” package
- Localization of around 25 critical mechanical and imported parts having world-class quality and competitive cost for import substitution, exports and the domestic market is a prerequisite. For this, transfer of state-of-the-art process and product technologies are a must and hence for bridging the viability–gap, Product-Linked Incentive support is necessitated under DPIIT. This would provide financial incentive to boost domestic manufacturing and attract large investments [More on PLI Scheme under DPIIT can be found here https://dpiit.gov.in/sites/default/files/FAQs-PLIWG-16082021_16Aug2021.pdf]
- FAME-II: Inclusion of E- Bicycle in FAME -II scheme of Department of Heavy Industry, GOI for faster adoption of E-Bicycle to augment in lowering the cost, creation of demand and pushing Global E-Bicycle Supply chain. Note that Government has approved Phase-II of FAME Scheme with an outlay of Rs. 10,000 Crore for a period of 3 years commencing from 1st April 2019. Out of total budgetary support, about 86 percent of fund has been allocated for Demand Incentive so as to create demand for xEVs in the country. This phase aims to generate demand by way of supporting 7000 e-Buses, 5 lakh e-3 Wheelers, 55000 e-4 Wheeler Passenger Cars (including Strong Hybrid) and 10 lakh e-2 Wheelers. [More on the FAME-II scheme here]
- Common testing and R&D facilities
- Setting up of an advanced cycle technology centre in Ludhiana with funds from Ministry of MSME schemes is needed to complement R&D, testing and certification; capacity building; incubation /start-ups; and so on.
GST Rationalization to 5%
Considering lowering of the GST from the current 12 percent to 5%, especially on low-cost bicycles could make them more affordable to a wider range of consumers, particularly for the rural and urban poor base. Increasing bicycle usage through policy initiatives such as GST rationalization for socio-economic benefits will boost micro-mobility, small earnings and ease of life to the underprivileged class.