Q1. Could you start by giving us a brief overview of your professional background, particularly focusing on your expertise in the industry?

I joined the Ministry of Road, Transport, and Highways Government of India in the year 2016. I can say that the period from 2015 to 2022 has been a remarkable period where the Transport Department, especially the automotive sector, has seen a lot of advancement in terms of technology, as per technology, not only limited to internet-based or online-based services, but also in the engineering infrastructure development, both for the automobile and for road transport.

So, I was lucky to be part of that journey as a consultant from 2016 till 2022, thereafter starting my own consulting for the OEMs as well as the new industry players such as battery swapping center companies or which are engaged in manufacturing specialized vehicles or Electric 2 or 3 wheelers which has a demand currently right now in India. 

I have been involved in policymaking and the road transport department for eight long years. During that period, one major change also occurred, and that was the introduction of the Motor Vehicle Amendment Bill 2019, for which I was fortunate to be part. Apart from that, I have been nominated as a member of the National Expert Committee for the development of a tamper-proof vehicle location tracking device, which was funded through the NIRBHAYA fund.

Apart from that, I have been on multiple committees leading to last-mile connectivity, scrapping policy, motor vehicle accident fund, cashless treatment, and all-India tourist permits. There were some major changes that occurred during that period in India.

So, I guess that would be a detailed background of what I have done so far.

After that, I have been working with a project finance institution.

It's not exactly a multilateral bank, but it's a bank that specializes in project finance.

Q2. What are the potential benefits and challenges associated with the vehicle scrappage policy for manufacturers, consumers, and the automotive sector?

Benefits

Customers

Firstly, I will discuss the benefits for all three stakeholders.

The scrappage policy is beneficial for customers because it provides a structured process for surrendering their vehicles.

So, when they scrap that old vehicle, it is not used, or they don't fear that
it might be used in the wrong way by some scrappage dealer. Therefore, it is now an authorized dealership, which boosts the confidence of its customers.

Additionally, they will receive extra benefits from scrapping the vehicle.

The market will determine the rates, and you are aware that certain policy benefits are currently applicable.

Though the policy has not been implemented all across the country, 
it is a part of it, and sooner or later, it will be implemented.

So people will benefit from that.

Automobile Manufacturers

For automobile manufacturers, when a vehicle is scrapped, there will be demand for new ones.

Although you were aware of this earlier, people looking to buy new vehicles, regardless of whether there was a scrappage policy or not, had already shown demand.

However, if even 0.1% of individuals had the mindset, it would indicate that the car was in a usable state. They had no idea how to get rid of it and everything else. Therefore, the expense of car maintenance might also be considered by the lower middle class.

We should scrap it and purchase a new vehicle so people who are extending their fitness after 15 years, at least if we consider that even 0.1% or 0.5% of people think that this will help us in removing their old vehicle and buying a new vehicle so the production is like, you know, this demand will increase the production. Ultimately, all these manufacturers will benefit.

In terms of the automotive sector, if we consider it as a whole, it consists of four key parameters: OEMs, customers, enforcement agencies, and scrapping centers. This is a complete ecosystem.

So, if this scrappage policy is implemented to benefit all of those, the entire sector will benefit.

Challenges

There are three or four challenges, though the central government has made this policy. 

No Confirmed Policy

Almost all the states have yet to make a confirmed policy for long-term implementation. They are still hesitant to offer tax benefits or any sort of financial incentive to customers, as directed by the Planning Commission, or, in other words, NITI Aayog, on how to implement this scrappage policy so that people can benefit from it and boost their confidence.

Trading of Scrapping Certificates

Second, one of the major initiatives of the scrappage policy was the trading of scrapping certificates on the exchanges.

So I feel it's a challenge for normal Indian people who still do not have that much access to this Demat account or online trading and all those things.

How can that be beneficial?

The end customer will benefit from that.

It's challenging to see how the government implements it, but from my point of view, the most challenging part is how states will accept it.

Sufficient Number of Scrapping Centers

Because there are certain things that states are hesitant about, like opening a sufficient number of scrapping centers. The major issue from an investor's point of view is that if I were to start a scrapping center, would I be able to obtain the required feedstock, which is essentially the vehicle that will come for scrapping? This is also a concern.

But from my point of view, the major challenge is that the states are hesitant to implement it, considering they will face financial loss in India if we leave behind 4-5 major states, every state has a budget deficit, so they are very constrained about implementing or giving any sort of incentive to the citizens at this moment.

However, there are people, including the government, the central government, and various agencies, who hold continuous meetings with all stakeholders to ensure this.

We should open up our view.

Federal Structure

We should not concentrate solely on the road tax collected from vehicles or the total revenue generated; we should think beyond that, including the revenue that might be generated with the help of his scrapping policy.

Continuous discussions are ongoing with the states, but it remains a major challenge whether the states will implement it or not, as we are aware that India has a federal structure, allowing states to opt in or out.

So that's the major challenge.

Q3. How are government initiatives such as the development of 6000 kilometers of electric highways on the Golden Quadrilateral influencing the adoption of electric vehicles?

The government is more focused on selecting particular highways by making the infrastructure green or electric-friendly, whether the operators will switch to that or not.

If we say the Golden Quadrilateral of 6000 kilometers, maybe the government has taken up some projects, in some areas, but as of my knowledge, the government is reconsidering selecting particular highways or segments of highways that can be electrified so that the bus operators normally use EV buses, so there are certain segments where it is feasible with the current battery size and and you know the charging time that is being used to charge the bus or the batteries.

Therefore, it's a commendable initiative for the government to collaborate closely with the operators.

The NITI Aayog conducted a meeting to identify possible highways or at least the sections of highways that the government will take up in the first phase to make them EV-friendly. If we look ahead to the near future, what will be the EV adoption rate? Or how can we see the number of buses flying on those routes?

I'm not particularly confident that the government's ultimate aim is to have EV buses only on those select highways where it is financially feasible for the operators to run.

Initially, for a few months or years, they might devise a scheme to fund those operators, boosting confidence in EV adoption in those particular segments. In the coming years, we will definitely see some electric corridors where EVs will be running.

Within a maximum of five years or possibly 2-3 years, we will see at least one or two highways where only electric vehicle buses will be running.

Q4. What is the projected growth of India's mobility as a service market from 2025 to 2033, and which segments - ride hailing, ride sharing, car sharing business is expected to lead this growth?

Mobility-as-a-service is the next reality in India. Because of the growing price, the depreciation of automobile costs, and increasing maintenance costs for an individual, young people who are buying vehicles have a mindset that having a car is costlier than riding through Uber, Ola, or any other similar service. With the growing demand for e-commerce, mobility as a service is likely to increase.

But if we talk about it as a whole, so mobility as a service in any way that we can say there will be a huge growth, whether it is a rental service, whether you know it is on leasing services, increasing a lot at least in tier one cities like Bangalore, Mumbai, Delhi, Gurgaon people.

People working in MNCs are opting to lease vehicles because it gives them the freedom to change any vehicle that they want frequently.

They are not bound to have a particular model running for 10 years, so that is also a concept that is growing apart from that.

The lower middle-class aspirations have increased, and so we can say that the majority of India's population is either lower middle-class or middle-class, and having an aspiration to have a car or at least travel through these types of services, the demand will be increasing rapidly, and I wish that those companies who are engaged in this sector will look for an opportunity and increase their vehicle base so that they can cater to the demand, because if they do not increase their fleet size, obviously the pricing will increase. Then, it will limit the number of customers if the pricing is high. If the pricing is nominal, like 12-14 rupees per kilometer, then the lower middle class will benefit, and this particular sector will grow. Therefore, if we consider e-commerce, the two-wheeler ridership is expected to increase. 

When we say the last mile connectivity is coming, these EV players will have a greater share in last mile connectivity. People will opt for those types of services. I'm aware that some startups have launched similar services in rural areas of certain parts of the country, and they have gained significant momentum, resulting in substantial revenue growth.

Therefore, whether mobility as a service will increase or not, it's definitely the future of India. Leasing and renting out vehicles will generate a great demand, especially for their use. We will see a lot of this service model in the coming future.

Q5. What are the prospects for AI-driven public service automation, and what challenges exist regarding data privacy and integration of legacy systems?

Accurate Database

The major problem with the use of AI is the quality of the data and the standardization of the data. It's an irony that the government started creating a database of vehicles and driving licenses way back in 2008, and yet we still cannot say with certainty whether all the data is correct or if the data fields are accurate. Using an AI without a solid database or an incorrect database is of no use. So that's a challenge.

The second thing is-obviously, AI is the future. We can reduce the burden, and AI can be used as a blockchain. In blockchain technology, governments are working on these databases.

So, if you change your address in a particular place, that address will be captured in the database everywhere.

Therefore, the AI scope is present, and the government is obviously considering this direction. However, having a database itself is a challenge right now.

So, the government does not have a perfect database, at least in terms of vehicles. 

Smart Challaning

The increase in smart challaning, is a drastic change. It's beyond comparison that, after 2019, it has also become a mandate that certain inner cities with a specific population need to have smart surveillance systems. In smart cities, there is a fixed component that the city must have Intelligence Transport Management System (ITMS) which will cater to this movement and enforcement of law or in easy terms, we can say challaning.

The government is facing issues in resolving the matter related to challan, so AI can be useful. AI can be useful in identifying regular offenders because the government has implemented a system where insurance premiums are based on the driver's nature or the number of challans associated with the vehicle. So, AI can also be useful for insurance companies and enforcement agencies, as one provision is being debated to prevent citizens from holding a driving license.

So, if you have an AI-based system, it can easily generate pop-ups, dashboards, or results without an individual having to work on that and run the queries.

In terms of data privacy, to be honest, it's worse here in India. 

It's very easy to get to the vehicle data, the ownership data, and the
personal data.

However, I'm hopeful that since they are engaging with company leaders to have certain parameters or technology inserted into the system, data leakage can be prohibited, or if something is happening, the ER-based solution can create a red alert. The government can send an audit team to investigate the reason for the shift in the pattern of data usage. The government is working on that, and I hope that in the future, things will improve. However, at this current moment, data privacy is a huge concern.

Q6. Which companies are developing and deploying advanced tolling technologies, and how are they collaborating with government agencies?

Some IT-based companies have tie-ups with telecom because the government is planning to have a based tolling system.

A real-time tolling and wants to remove the toll gates. So, the future of tolling will be based on GPS.

But again, since these companies are into manufacturing Realty devices, they are actively working with the government to get this done.

There was a conference at the national level where the Ministry of Road Transport has now called upon industry leaders or companies associated with that particular segment to give their concerns or ideas or to give the challenges that they will face. Therefore, the government is aware that multiple challenges are associated with implementing a GPS-based tolling system. 

Currently, the mechanism for tolling involves the toll software being connected to WAN D, which, as you are aware, contains all the data fields specific to a particular vehicle.

Earlier, the government used to do this: if a truck was moving and was supposed to pay a toll, a 6-axle truck was required to pay ₹3000 or ₹5000. They used to enter the mini truck or LCV category and pay only ₹100. So, there was a revenue loss for both the operator and the government. So, the government, way back in 2018, I suppose, connected the NHAI software's tolling software with the VAHAN database.

Now, whenever any vehicle comes, you know that you have also seen the vehicle number displayed at the toll gates, and by that, they're fetching the details - vehicle class through the VAHAN system. The specific number of pieces for each vehicle class is now collected.

Currently, technology is also being used to reduce the gap; however, in the future, the government plans to implement GPS-based tolling. Only companies that produce vehicle location tracking devices and have experience in the field of telecom or EC manufacturing can be useful, or they may be interested in this opportunity.

Tenders issued by the NHAI because it will be a component of that. Therefore, any company with experience in VLTD manufacturing, EC manufacturing, mobile tower triangulation, or related fields may be well-positioned to secure or win tenders.

Q7. If you were an investor looking at companies within this space, what critical question would you pose to their senior management?

There are 3 things that I would ask for-.

• Financing model for the buyer of your particular vehicle class or the vehicle manufactured by that particular company
• Battery charging system, as well as the availability of a battery swapping system for that particular model of batteries used with that vehicle
• Whether the vehicle is manufactured, what are the different types of models that are being manufactured? Generally, bulk demand comes from either taxi aggregators, such as Ola or Uber, or bus operators. That's the area where at least 90% of demand is currently coming from. So, whether the vehicles produced or manufactured by those OEMs align with the interests of the majority of the customer or client base?
• What type of client they are looking for?

So, as an investor, these are the four questions that will be in my mind because these factors affect the sale of the vehicle.