Monday, 30 May 2016

Retiring Old Vehicles - Gadkari Style ?



Here is how , Road Transport Ministry proposes to remove from the roads, some 28 million vehicles which are 10 year old :


INCENTIVES  TO  VEHICLE  OWNERS :

#  Fair value for the vehicle to be scrapped ( needs to be defined precisely )

#  Rebate of 50 % of Excise on purchase of New Vehicle ( BS IV compliant )

#  Discounts by Auto Manufacturers ( How much ?  Who picks up the tab ? )


All of these combined will reduce the cost to buyer by 8 % - 10 %



PROCEDURE :

#  Owner to deposit old vehicle documents at Recycling / Shredding Center

#  After verification , Owner gets a Certificate and scrap value of the vehicle

#  Owner submits Certificate to Dealer while buying new vehicle to get
    discount


BENEFITS  EXPECTED  :

#  Reduce vehicular emission by 25%-30%

#  Save 3.2 billion litres of oil , every year

#  Save Rs 7000 Crore in oil imports , every year



While welcoming this initiative , I request Shri Nitin Gadkariji , to ponder the issues raised in my following earlier blog , when Shri Piyush Goyal had made a similar proposal , sometime back


Surely , no one - least of all , the car owners - would want to get caught between two , very ambitious , but contradictory plans  !

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Sunday, 27 March 2016

PIYUSH PLAN ?


After second world war , European economy was in shambles / devastated

It was revived through America's generous help in the form of Marshal Plan

A couple of days back, Shri Piyush Goyal announced intention to replace India's current petrol / diesel vehicles with Electric vehicles , by 2030

Now , consider this :

*   India boasts of 200 million vehicles today

*   We add some 10 million new vehicles each year

*   Today , global electric vehicles number only 6.65 lakhs

*   World may reach 30 million electric vehicles by 2030


In light of this , is " PIYUSH  PLAN  " feasible  ?

Let us take up the associated issues , one by one , and explore possible solutions


#   TIME  FRAME  for  CHANGE-OVER


Replacing 13.3 million vehicles per year ( starting TO-DAY ! ) to fully change-over 200 million vehicles in 15 years , is NOT possible

Remember , some 10 million vehicles get added each year for replacement / new demand

Way Out :

*  Existing vehicle manufacturers to COMMENCE production of electric vehicles by 2020 , giving them 5 years lead time to tool up

*  Manufacturers to start TAPERING OFF production of petrol / diesel vehicles from 2020 at the rate of 10 % per year. In 10 years ( by 2030 ) , they must stop all old vehicle production

*  Simultaneously , manufacturers to step up electric vehicle production by 10 % per year , so as to achieve 100 % electric vehicle production by 2030

*  This time frame will also apply to auto components / ancillary manufacturers ( Batteries etc )

*  Complete elimination of petrol / diesel vehicles from the roads to be targeted by 2050



#   DISPOSAL  OF  EXISTING  VEHICLES ( 200 million + produced till 2030 )

*  Enable / encourage MSME units to carry out " Retro Fitting " of existing vehicles

*  Vehicles older than 15 years to be taken off the roads . Encourage MSME to salvage whatever they can from such vehicles ( eg : Steel )

*  Provide special incentives to export such " Pre-Used / Reconditioned " to less developed countries



#   CHARGING  STATIONS

*    Existing petrol / diesel filling stations will need to be converted to Electric Charging Stations

*   These Charging Stations , themselves , must NOT draw electric power from State / National Power Grids - power which comes from Power Stations using FOSSIL FUEL  !

That would only transfer the pollution creation from vehicle engines to fossil-fueled power stations !


MY  SUGGESTION :

Use bicycle powered electricity generating device , innovated by Manoj Bhargava ( BillionsinChange )

This pedal operated device generates / stores , with just ONE HOUR of pedaling, enough power to light up 12 lamps of 100 W each for 24 hours , and costs around Rs 10,000/-

Some 25 of such devices are right now under installation in north India

Its construction is so simple that any MSME in smallest town can fabricate it easily , making it possible to get 10 million of these devices manufactured within a year

I am sure , Manoj Bhargava would be more than happy to release its manufacturing drawings on his web site for anyone to register and then download for FREE !

Do we foresee 50 / 60 million unemployed youth to become self-employed by setting up their own mini Charging Stations , on every street corner of every town in India ?

No dependence on Fossil or Solar , yet pure GREEN power around the clock !

Who knows , some owners of electric cars may even install one in their garage to serve dual purpose ( improve health + charge the car ). No doubt , a higher capacity version !

And , may be all GYMS around the country will install one !

Some 32 years ago , India witnessed a Telecom Revolution , riding on the wheels of a million roadside PCOs and a million Cyber Cafes

Piyushji :

Enabling launch of a million street-corner Charging Stations has got to be your

TRYST  WITH  DESTINY 




#   FINANCING

Shri Goyal said :

" We don't need one rupee support from the government

 We don't need one rupee investment from the people of India "


But Vehicle Manufacturers say :

"  We cannot give away electric cars for FREE ! We need money to run our operations and in advance . At the most , we can consider some sort of " Hire Purchase " scheme , if we can get funds at an interest rate of 5 % and are allowed to charge the buyers , 10 % "


And Banks say :

" We have already advanced car-loans totaling thousands of crores . If we are allowed to transfer the unpaid balances along with the fresh loan amounts , to a " Restructured Loan " bearing a higher interest rate ( and EMI ) , then we can consider "


Government says :

" We don't have funds to build more roads . So, where is the question of financing private purchase / usage of cars ? We would rather build more / better ( concrete ) roads "


Individual says :

"  I can hardly make ends meet ! If I must borrow from anyone , I would rather buy a roof over my head . I am already paying huge EMIs for my current car "


I say :

*  No questions asked for any CASH deposited into a person's Jan Dhan Bank account
  
*  Create a SPV called , EVFF ( Electric Vehicle Finance Fund )

*  Public can invest in this fund but only from their Jan Dhan Bank Accounts deposits

*  Interest earned from EVFF to be totally free from personal Income Tax for 10 years

*  EVFF will finance Car Loan companies or " Hire Purchase Schemes " of car manufacturers

*  Car finance companies will be asked to stop financing of petrol / diesel cars and finance
    only electric vehicles


If this is implemented , within 6 months , EVFF will be able to create a Corpus of Rs 10 lakh*crores !

Can you think of a better way of harnessing  BLACK  money to finance a  GREEN  future ?



#  INCENTIVE  FOR  CAR  MANUFACTURERS  AND  CAR  OWNERS

Shri Goyal says :

" We are trying to make this program self financing by monetizing the savings people have from using cheaper electricity to run cars

We are trying to work out whether we can give the cars for free initially and people can pay back out of the savings from not using petroleum products "


Figuring out which electric car owner saved how much money by not using petrol / diesel vehicle is a very messy issue , to say the least !

People use , from a 5 HP scooter to a 200 HP gas-guzzler car

Some use it for 500 KM per month , whereas others use for 10,000 KM per month

They may use it for self / family or for commercial purpose ( Rickshaw / Taxi / Bus / Truck )

They may use diesel or petrol ( even mixed with kerosene in case of rickshaws )

For 200 million existing vehicles , there could well be , 200 million different / unique ,

*  Current amounts ( liters ) monthly fuel usage

*  Purchased at differing prices per litter ( depending upon city )

*  Amounts paid to Charging Stations ( bound to vary , even within a city )

*  All of these leading to different amount of monthly savings

*  All the while neglecting the monthly EMI costs incurred !


I am afraid any attempt to compute " Individual Savings " is bound to raise controversies and litigation of unimaginable scale !

And let us not forget that , when vehicle manufacturers switch-over to production of electric vehicles , it won't be just ONE / STANDARD model of same horsepower

There will be hundreds of models of electric  vehicles of different designs / capacities / specifications and consuming different amounts of electric power  !

My suggestion :

Forget about ,

*   Computing of " Individual Savings "

*   Giving electric cars " free initially "

*   Owners " paying back from savings "


Based on car specifications / assumed average monthly usage  etc , figure out and fix

*  " Carbon Credits " for each model of electric car manufactured

*   Based on Carbon Credits earned , calculate Direct Transfer of Benefit ( DTB ) to electric
     car manufacturers based on monthly dispatches of each model

and then transfer these amounts from EVFF , as incentives to manufacturers 

As far as incentives to electric car owners is concerned , make tax-exempt , all interest paid by owners for car loans taken , without any ceiling



#   GENERAL / GLOBAL  INCENTIVES

This game-changing initiative has at its root ,

"  SAVE  THE  WORLD  FROM  POLLUTION  "


This would require " Pulling out all stops " , in the form of unprecedented " Incentives " to :

*   Individual Electric Vehicle Owners

*   Electric Vehicle Manufacturers ( and " Disincentives " to petrol/diesel manufacturers )

*   Manufacturers of Charging Station Equipment ( Bicycle based Devices , for sure )

*   Charging Station Operators

*   Old Vehicle Retrofitting  Units ( MSME )

*   Old Vehicle recycling Units ( MSME )

*   Old Vehicle Exporting Units

*   Roadside Vehicle Repairers

*   Vehicle Purchase Finance Companies ( Car loans / Hire Purchase )

*   Electric Vehicle Leasing Companies

*   Auto Ancillaries of Electric Vehicles

*   Distributors / Dealers / Stockists of Electric Vehicles

*   Transport Companies using Electric Vehicles ( transporting people or goods )....etc



ALL of these ( and those that I missed out ), must be EXEMPTED from :

*   Indirect Taxes ( Excise / Octroi / Import Duty / Sales Tax / GST / Road Taxes etc )

*   Direct Taxes ( Personal and Corporate Income Tax / LTCG )


They must also be freed from rigid licensing / registration / incorporation requirements

Dear Piyushji :

Newspaper reports quoted you :

" We are thinking of leading the World rather than following the World

  India will be the first country to think of that scale "


There is no doubt you can lead the World , if you do not allow yourself to get paralyzed with the fear of failure !

-------------------------------------------------------------------------------------

31  May   2016

www.hemenparekh.in / blogs


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Saturday, 28 May 2016

Capital Goods Policy : Some Questions


On 25 May 2016 , NDA Cabinet approved Capital Goods Policy ( 2025 ) document


It is a very exhaustive and well-researched paper , providing a lot of statistics


These include following targets :


#  PRODUCTION

Rs 2.3 lakh*crore ( in 2014-14 ) to go up to Rs 7.5 lakh*crore in 2025

An increase of Rs 5.2 lakh*crore ( by the tenth year )


#  EMPLOYMENT

84 lakh ( in 2014-15 ) to go up to 300 lakh in 2025

An increase of 216 lakh ( by the tenth year )



Here are some " Back of the Envelope " type of calculations :


#  PRODUCTION PER EMPLOYEE

Rs 2.74 lakh ( in 2014-15 ) going DOWN to Rs 2.50 lakh*crore ( in 2025 )

Is this in to-day's RUPEE terms  ?  At today's SELLING PRICES   ?

If not , what would this figure be , if  NOT  adjusted for inflation  ? 




#  CAPITAL  OUT-PUT  RATIO

I believe , this is close to ONE , for most of the sub-sectors covered under Capital Goods Industry


If I am right , then the TOTAL CAPITAL EMPLOYED ( TCE ) currently in this industry , ought to be approximately the SAME as the value of production , ie : Rs 2.3 lakh*crore


Now , let us assume ( correct me if I am wrong ) that the INCREMENTAL CAPITAL OUTPUT RATIO ( ICOR ) for this industry is 4.0


That is , for each additional rupee of production , we need to employ , FOUR rupees of Capital


If so , to raise OUTPUT by additional Rs 5.2 lakh*crore , we would need to inject into the industry , Rs 20.8 lakh*crore worth of additional Capital , over a period of 10 years ( 5.2*4 )


In turn , this raises following questions :


Will private sector come forward to make such investments when the current Capacity Utilization of the industry is stagnating around 60 % only , for want of orders -  which , often need a lead-time of 2 years to execute  ?


And , when IMPORTS constitute nearly 40 % of the annual purchases of Capital Goods  ?


When capital goods manufacturers in the shrinking economies of Europe / Japan / China , are offering " deep discounts " to sell their products to Indian buyers ?


I know of a Machinery Manufacturer of Italy , who depends upon Indian Buyers for sale of 50 % of his factory output  !


When gestation period for setting up a factory to make Capital Goods , can easily take 3 years ?


I hope CII / FICCI / ASSOCHAM etc will conduct an ONLINE SURVEY of their Members and elicit their OBJECTIVE ASSESSMENT of the newly announced policy , in order to provide a QUICK FEEDBACK to the government


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29  May  2016

www.hemenparekh.in / blogs

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Friday, 27 May 2016

3D Printed Office ?



WHAT  ?

Dubai has opened what it said was the world's first functioning 3D - printed office building to house temporary headquarters of Dubai Future Foundation



SIZE  ?

250 Sq M ( 2700 Sq ft )



COST  ?

$ 140,000  ( approx Rs 98 lakh ) / only Rs 3630 per sq ft  ?



TIME  TO  CONSTRUCT  ?

17 days



NO  OF  WORKERS  ?

18 ( including Supervisor )



SAVINGS  ?

#  Construction time ............ 50 - 70 %

#  Labour Cost..................... 50 - 80 %



MATERIAL  USED  ?

Special mixture of cement



SIZE  OF  3D  PRINTING  MACHINE  ?

20 feet ( height ) / 40 feet ( width ) / 120 feet ( length )



WHAT  NEXT  ?

Says UAE Prime Minister, Sheikh Mohammed bin Rashid Al Maktoum :

"  Dubai's strategy is to have 25 % of the buildings in the Emirate printed , by 2030  "



LESSON  FOR  INDIA  ?

If we can send Mars Orbital Mission and a Reusable Space Vehicle , what is so difficult to " Copy / Adapt " this 3D printing technology for those 20 million ( or is it 50 million ? ) , affordable flats that we want to build by 2022 ?


As far as I can make out , all that stands in the way is  :


#  To invite WINSUN DESIGN DECORATION COMPANY of Shanghai ( the World leaders in 3D Printed Housing ) , to set up operations in each Indian State


Or is it " Fear of Failure / Fear of being Ridiculed , if things don't work out as well as expected / Too much Analysis producing Action Paralysis "  ?


Remember , Thomas Alva Edison was not " ashamed " of trying 1400 + times , before succeeding to invent a light bulb !


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28  May   2016


www.hemenparekh.in / blogs   

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