Hyundai, the major South Korean carmaker, is planning a significant IPO (Initial Public Offering) in India to raise ₹25,000 crore by selling a 17% stake in its local unit. However, the company has expressed concerns about the “frequent changes” in Indian government policies, which they believe could affect both investment in the country and the speed of technological advancements.
Since starting its operations in India in 1996, Hyundai has invested almost ₹30,000 crore. The company emphasises that stable government policies are vital for making confident investments and implementing the required technological updates set by the government.
Concerns Over Policy Changes
In its Draft Red Herring Prospectus (DRHP) submitted to SEBI (Securities and Exchange Board of India), Hyundai highlighted the difficulties posed by frequent policy changes. They argue that such shifts make it challenging for the auto industry to not only comply with regulations but also to make long-term investment commitments. Hyundai stated, “Overall policy stability and transparency are needed to ensure a smooth technology transition and localisation in India.”
Future Investments
Hyundai plans to invest an additional ₹32,000 crore in the coming years. This investment will focus on launching electric vehicles (EVs), developing infrastructure for green technologies, and expanding production capacity. A key part of Hyundai’s strategy is to produce EVs locally to meet the demand in the mainstream, high-volume market.
Localisation Challenges
The company also raised concerns about the government’s push for localisation, which includes policies like the Production Linked Incentive (PLI) schemes for automotive technology and advanced cell chemistry, as well as initiatives under Atmanirbhar Bharat and Make in India. While these policies aim to reduce import dependence and manufacturing costs, they require substantial initial capital investments from the industry.
Hyundai noted, “The government has introduced schemes with subsidies and import duty benefits to encourage investments. However, there are still challenges in meeting the eligibility criteria and accessing these benefits.”
Simplification Needed
Hyundai believes that simplifying and better tracking policies will help achieve localisation goals. The company pointed out that the progress of vendors connected to individual Original Equipment Manufacturers (OEMs) could change the industry’s risk profile from a supply-side perspective.
Focus on Local Production
To enhance the price competitiveness of its EV models, Hyundai plans to establish local production capabilities for key components. This includes cells, battery packs, power electronics, and drivetrains. The company is committed to building a localised EV supply chain to support its future growth in the Indian market.
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