COIMBATORE
Vijayan Srinivasan of Eco Dynaamic in Coimbatore is into the manufacturing of electric three-wheelers for more than a decade and has sold over 4,000 vehicles that are operated within the premises of the buyers. It is only in 2022 that Tamil Nadu came out with a policy for electric three-wheelers and there are a lot of challenges even now in getting approval for commercial sale of e-rickshaws, he says.
Manikandan Palanimuthu, Chief Executive Officer of Greenerg Mobility Solutions, is one of the few electric vehicle (EV) startups in Coimbatore that has raised funds and develops displays for electric vehicles. Its additional requirement is almost ₹100 crores. “We develop a new model almost every six months,” he says. However, a customer suddenly stops purchasing a particular model because of the change in product requirement and safety norms and the stocks of the older models become a financial burden on the company, he says.
Vijayan and Manikandan are among the early entrepreneurs in the growing ecosystem of startups in the EV space in Coimbatore, which is one of the major micro, small and medium enterprises (MSME) clusters supplying components to the conventional automobile sector. While the EV supply chain holds potential for MSMEs and startups, it is not an easy drive, they say.
From access to finance and technology to availability of skilled workers, there are several roadblocks for these entrepreneurs.
Under the second phase of FAME India Scheme, which gives away ₹6,825 crores in incentives, over 16.17 lakh electric vehicles, including 14.69 lakh two-wheelers and 1.78 lakh three-wheelers, have been sold in India till February 19, 2025.
Earlier, there were just a handful of big names that were selling internal combustion engine (ICE) two-wheelers. More than 300 brands sell electric two-wheelers now across the country. Most of them prefer to source their component needs from the existing suppliers in the automobile vertical as these MSME units know the quality standards and the general requirements of the industry, says a Bengaluru-based electric two-wheeler manufacturer, indicating the potential for MSMEs that are already in the automobile supply chain or those that want to enter this industry.
Another original equipment manufacturer in Coimbatore says the FAME Scheme is intended to support the electric vehicle manufacturers develop a local or in-house supply chain for the component requirements. However, many brands use it to sell the vehicles at a lower price in the market. The component cost is multiple times higher when sourced locally compared with imports. “Some manufacturers took genuine efforts to localise the components. Some did not. This effort will take a long time and the government support should continue till then,” he says.
The battery pack is assembled in India by most of the electric vehicle manufacturers and they import the cells. China gave huge incentives to build its domestic supply chain eco system for EVs. Product development and innovation will take years and will go through changes to meet the required safety norms. The government should look at long-term support for the EV manufacturers and component suppliers, especially those in the MSME sector, for finance and technology, say the EV stakeholders in Coimbatore.
Further, most of the EVs sold now are two-wheelers. The MSMEs in the automobile clusters supply components for four-wheelers and heavy vehicles too. As long as sales of ICE cars, trucks, and buses continue to grow, these component manufacturers will have orders and supply to EVs will only be an additional business, says K. Ilango, an automobile component manufacturer.
Organisations such as the Coimbatore District Small Industries Association (CODISSIA), Southern India Engineering Manufacturers Association (SIEMA), and the Scientific and Industrial Testing and Research Centre (Si’Tarc) are looking at cluster approach to develop common facilities that will support the MSMEs and startups to venture more into the electric vehicle sector.
The CODISSIA president M. Karthikeyan and its treasurer P. Ponram say they have conducted skill development programmes for MSMEs so that the shopfloor workers are able to meet the high precision needs of EV manufacturers. They are also exploring ways to make funds available for MSMEs that want to venture into the EV segment.
According to K. Mohan Senthil Kumar, president of Si’Tarc and who is also supplying to EVs, SI’Tarc, CODISSIA and SIEMA are setting up a common testing and product development centre in Coimbatore with the support of the Tamil Nadu government, especially to support MSMEs to make motors for EVs. This centre will also take up skilling programmes.
However, Kanishka Arumugam, Chief Executive Officer of Ekki Pumps, says it is not easy for MSME motor manufacturers to start making motors for EVs. It requires more funds and the OEMS are currently making the motors in-house or purchasing from large-scale manufacturers. The entire supply chain eco system for EVs will take time to stabilise and MSMEs will have a clear path ahead only then.
K. Barathan, founder of Ozotec Automobile, says the vendor requirement ratio for electric and regular two wheelers is 1:5. As much as 60%-70% cost in any electric two wheeler is for battery pack. “If battery technology is developed in India, EV is the future,” he says.
While the opportunities may be less at present for MSMEs that want to be part of the component supply chain for EV two wheelers, there are new technologies and new skill sets that are in demand. For instance, Ozotec’s team of developers are all engineers who have landed their first job. “We need engineers, software developers, data analysts, etc,.” he adds.
Nithyanandan Devaraaj of Indian Institute of Foundrymen also points out to the opportunities emerging in the limited mobility space, such as forklifts, for EVs.
“We need to wait and watch,” says Mr. Kanishka on how the MSMEs in automobile clusters can tap the opportunities in the EV space.
Watch: Headwinds ahead for Coimbatore’s automotive sector’s EV transition
Published – February 21, 2025 07:00 am IST
