How a climate-proofed MSME sector can drive Tamil Nadu’s EV leadership

Vijayawada, Andhra Pradesh, 22-09-2023: Mayor R Bhagyalakshmi deputy mayor Bellam Durga and others participate in electrical autos consciousness exercise as a a part of automobile free day at VMC workplace in Vijayawada on FridayPhoto: Giri KVS/ The Hindu
| Photo Credit: GiriKVS

Ashwini Hingne

Tamil Nadu is gearing as much as be a world electrical automobile (EV) manufacturing hub, with the federal government searching for to draw ₹50,000 crore in investments and envisioning 1.5 lakh new jobs within the EV sector within the subsequent 5 years. Investments price nearly ₹40,000 crore is already underway, and as per current information, Tamil Nadu is without doubt one of the largest EV manufacturing states in India, producing greater than 40% of all registered EVs and 46% of electrical two-wheelers.

Yet, Micro, Small, and Medium Enterprises (MSMEs) maintain the important thing to unlocking the potential of those investments and future progress.

MSMEs are Backbone of TN’s Economy  

Contributing considerably to the State’s in addition to the nation’s GDP, MSMEs are financially susceptible, depending on fossil-based power, and in want of great technological upgradation and effectivity enhancements. Tamil Nadu manufactures 35% of India’s automotive parts – a sector that’s largely pushed by MSMEs and contributes to 8% of the State’s GDP. Not solely does this make MSMEs the spine of the State’s economic system but additionally essential within the progress of Tamil Nadu’s rising EV business.

Most EV parts are presently imported however the EV part market is projected to develop at a CAGR of twenty-two% till the tip of the last decade. This presents MSMEs with a big alternative as EV producers are eager to localise their part base to carry higher flexibility, customisation and high quality management whereas decreasing prices, import dependence, and potential provide chain disruptions (as skilled throughout Covid). It additionally means vital new investments and manufacturing capabilities can be in-built newer parts resembling motors and controllers, battery administration programs, chargers and charging stations, amongst others. From the State’s perspective, EV-ready MSMEs have the potential to create new and greener jobs, particularly for girls in a sector that has historically been male dominated. 

However, a transition to EVs may also want to make sure that current Internal Combustion Engine (ICE) part producers, particularly these on the danger of shedding enterprise as sure parts grow to be out of date, are in a position to diversify to EV part manufacturing or allied sectors.

Therefore, constructing MSME capabilities and sustenance must be in sync with the investments being made by auto corporations to help Tamil Nadu’s transformation to a world EV manufacturing hub.

Upskilling and Just Transitions

Building future-ready MSME’s would require skilling and upskilling: as conventional ICE part producers transition to EVs, a vital share of MSMEs and their workforce may very well be prone to shedding enterprise and livelihoods. To guarantee a simply transition, such companies will want consciousness on evolving market traits and alternatives in EV part manufacturing. Additionally, they are going to want hand-holding and help with go-to-market methods, modern and hands-on skilling applications catering to current workforce – each white and blue collar, and incentives to undertake skilling of staff.

Upgrading Curriculum in Technical Institutes

This must be complemented with upgradation of curriculum in technical institutes, offering short-term trainings and apprenticeships for recent graduates, together with ladies, to create a inexperienced workforce for the long run. Moreover, as a new and evolving sector, manufacturing EV parts may also want vital investments in R&D, testing centres, and customary facility centres to help design and innovation in addition to to make sure excessive requirements of high quality. Tamil Nadu has taken a lead on this course by means of its determination to determine E-mobility centres in state-owned polytechnic faculties, initiating redesign of curriculum and establishing widespread facility centres to fulfill the burgeoning EV business necessities.

Decarbonising MSMEs

MSMEs may also must grow to be greener over time as world and Indian auto manufacturers undertake local weather targets requiring suppliers, principally MSMEs, to report and handle their carbon emissions and power use. Staying aggressive in an more and more decarbonising world would require MSMEs to undertake interventions to handle their environmental affect by understanding their emissions sources and discount choices. Such actions have the potential to herald efficiencies and scale back working prices. While MSMEs presently lack the capability to undertake such initiatives, vital consciousness constructing, trainings and concessional finance will improve their skill to undertake local weather motion and keep aggressive.

Becoming Climate Resilient

Climate-related excessive occasions resembling heatwaves and floods are already impacting life, livelihoods and productiveness in India. International Labour Organisation’s 2019 report means that by 2030 India might account for 34 million of the projected 80 million world job losses from warmth stress-associated productiveness decline. To be certain that Tamil Nadu’s MSMEs are higher outfitted to handle these challenges, it is very important perceive their present and future local weather vulnerabilities. Sharing information about such impacts, and the institutional and particular person actions wanted to construct resilience and safeguard well being and enterprise, will significantly support MSMEs in the direction of a resilient future.

Tamil Nadu’s up to date EV coverage outlines a vary of measures to reinforce skilling, finance and manufacturing capabilities of MSMEs. Private and non-profit-led initiatives should help the state in operationalizing such insurance policies in ways in which tackle present and future wants of MSMEs. With a thriving and future-ready MSME sector coupled with a expert workforce, Tamil Nadu can exhibit how turning into a world EV manufacturing hub can be achieved whereas guaranteeing a simply and inclusive transition.

(Ashwini Hingne is Associate Program Director at WRI India. Views are the writer’s personal)