Tag: ev

Incentives Matter, the Auto PLI Edition

The production-linked incentives (PLI) scheme for the automotive sector has hit another speed breaker due to lack of clarity about the process to apply for subsidies, multiple industry executives said.
The government is still working on the standard operating procedures (SoPs) for claiming incentives, nearly two years after the scheme became operational, the people said on the condition of anonymity.

https://www.livemint.com/news/india/why-india-s-auto-pli-is-yet-to-pick-up-after-two-years-11703788981031.html

What is missing? Processes for verifying sales and investments, the “formats” of various certificates, undertakings and documents, and a “standardized procedure” for testing agencies to verify the claims.

More importantly, the article goes on to point out three very face-palm-y things. One, no applicant has been able to file claims for the first year of the scheme, which ended in March 2023. Why? Because the SoP for calculation of domestic value addition were only released a year after the scheme become operational. Second, the volume of documents and compliances required only seems to be going up. And finally, the reason this is happening is because of the unholy mess that was FAME-2.

Executives said the government’s insistence on strict compliance with the rules arises from its experience with another auto industry subsidy scheme. Many automotive companies had wrongfully claimed subsidies as part of the FAME-2 scheme by stating incorrect details and taking a warped interpretation of the rules. Many companies wrongfully claimed that they were sourcing certain parts locally as mandated by the scheme even as they relied on imports.
“The FAME episode has put the whole ecosystem into an auditor’s mindset rather than a facilitator’s mindset. The same rules can be interpreted in different ways. They are taking the strictest interpretation due to the FAME setback,” an auto industry executive said.

https://www.livemint.com/news/india/why-india-s-auto-pli-is-yet-to-pick-up-after-two-years-11703788981031.html

Now, there are only two acceptable ways to react to news like this these days. You can take your pick.

The first would be to point out that it is early days, and that other schemes in the past have also had teething issues, and that it is too soon to tell, and that we need to be more positive about things that are being attempted.

The second would be to point out that nothing seems to be working, and that this is another example of how bad things have become, and it is all announcements and glitz and glamour, but the nuts and bolts of policymaking really and truly matter, but nobody cares.

Would you care to take a look at a third way instead?

The third way involves thinking about a paragraph from the article, one that I have not quoted thus far. Here goes:

“No one wants to take the blame in case anything goes wrong with this scheme too. But in all that, somewhere, the spirit of the scheme has got lost,” they added.

If you are a sarkari babu tasked with “making this PLI work”, you can treat your assignment in one of two ways. Option one is to treat your job as one in which production of automobiles in India goes up over time. Option two is to treat your job as one in which you are not to be blamed for companies taking undue advantage of the rules and compliances you set up.

The problem is that option one means that you may well get the production to go up, but you cannot control for incidences of cheating. Option two, on the other hand, means that you may well come out of this smelling like roses, but production of automobiles may not go up.

Which error would you rather make?

Babus in our country are crystal clear about their choice. They are always going to choose option two.

Why, you ask? Well, because there is no upside to them in the case of option 1. Their salaries don’t go up if automobile production increases. But in the case of option 2, they will be in hot water if companies end up cheating on subsidies and incentives given.

Ask yourself how their incentives line up, and once you answer that question, the article in Livemint begins to make a lot more sense. It is still depressing as hell, mind you, but hey, at least you understand why.

Economics can be quite a simple science every now and then, thankfully. It can also be quite dismal, more’s the pity.

Video for 12th July, 2020

I came across this video thanks to David Perell’s newsletter.

Short, concise and very informative! Also, India may well leapfrog into a much more advanced freight transportation world compared to where she is at present.

Interesting times ahead.

Tech: Links for 8th October, 2019

  1. “What we are doing is creating selfies, documenting moments with family, and snapping photos of food and latte art. We aren’t even trying to build a scrapbook of those images. It is all a stream — less for remembrance than for real-time sharing. In other words, we have changed our relationship with photography and photographs. It used to be that, photos served as a portal to our past. Now, we are moving so fast as we try to keep up in the age of infinitesimal attention spans. A minute, might as well be a month ago.”
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    The excellent Om Malik on cameras, art, servers and obsolescence.
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  2. “Around the world, governments are setting timeframes by which all cars are to be electric. Norway is requiring all cars to be zero emission by 2025—and more than 50 percent of its cars today are electric. However, China is winning the race in terms of units, with more than 1 million EVs sold in 2018. The U.S was the second largest market, with 361,000; Norway had 73,000. China and the U.S. are at 4.44 percent and 2.09 percent market penetration, respectively, so there is lots of room for growth. China is stimulating growth with public policy: It aims to have 2 million in annual EV sales by 2020 and to outlaw the internal combustion engine sometime before 2040. France has also committed to a ban by 2040 and the UK by 2050. Governments are seeking to accelerate uptake through a potpourri of incentives, ranging from tax breaks to free parking to fees on conventional cars in low emission zones.”
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    A useful (to me, at any rate) overview of the EV market in the years (decades) to come.
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  3. “In a new book, Mr. Smith makes the case for a new relationship between the tech sector and government — closer cooperation and challenges for each side.“When your technology changes the world,” he writes, “you bear a responsibility to help address the world that you have helped create.” And governments, he writes, “need to move faster and start to catch up with the pace of technology.””
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    On Microsoft’s middle path. I come from a generation that simply could not have predicted this.
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  4. “A new priest named Mindar is holding forth at Kodaiji, a 400-year-old Buddhist temple in Kyoto, Japan. Like other clergy members, this priest can deliver sermons and move around to interface with worshippers. But Mindar comes with some … unusual traits. A body made of aluminum and silicone, for starters.Mindar is a robot.”
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    In a sense, unsurprising. But still: religion, rituals and… robots?
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  5. “Christine Figgener, a marine biology grad student aboard the boat, filmed with her phone as a colleague tried to yank some sort of tube from the turtle’s nose. At first, Figgener thought it might be a worm. Then she saw it was a piece of plastic. “Is that a freaking straw?” she exclaimed, outrage blooming in her voice. Indeed, it was. In time, the straw was plucked from the turtle’s nose and the sad, green fellow liberated. But Figgener—who’d been researching turtle behavior in pursuit of her Ph.D. and had seen marine life tormented by plastic junk countless times before—could not stop fuming as the boat returned to shore. It was, if you will, the last straw.”
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    On technology and… straws.