Make cashless transition gradual and user-friendly: RC Bhargava of Maruti Suzuki

RC Bhargava, chairman of Maruti Suzuki, reckons that smaller diesel cars will go out of production after 2020, and that more petrol cars will be sold in India than diesel.

In an interview with ET Auto’s Nabeel A Khan, Bhargava pitches for reduction in bank transaction charges and argues that introduction of airbags and ABS in small cars is a premature move. He also backed the government’s recent measures — demonetisation, GST — saying they will put India on fast track to becoming the “factory of the world”. Edited excerpt:

How do you look at demonetisation?
It is the first step towards cleaning the economy of black money and everything that goes with it — terrorist activities, corruption, ostentatious consumption and inflation. If we move towards a cashless and digitised economy — and GST will also assist in making this happen — we will progress quickly towards being the superpower in the factory of the world.

Do you think it will have a prolonged effect on the auto industry?
I think the PM wants to move towards a cashless and corruption-free economy. If that happens, it will be good for the economy, and eventually, for the car industry. There may be a temporary impact, but it will be short term.

You have been advocating a cashless economy; how can we go about it?
We should go step by step, don’t try to implement the whole process across the country in one go. First do it in big towns, then the next level. So that people can get time to prepare themselves — open bank accounts, acquire debit and credit cards and join platforms such as digital wallets, because infrastructure and resources in India are not large enough to implement such a big thing in one go. Second, the process will have to be user-friendly where people can have confidence because one of the reasons they don’t use internet banking and net payments is because they are scared of fraud. I think we should use a finger print identification in all online transactions, whether you are using debit or credit cards.

Fingerprint readers are easy to get, not expensive, and government should subsidise prices of such devices to encourage their use. It is helpful for the illiterate because fingerprints cannot be replicated, and will eventually make everything simpler. Also, the charges for using debit cards should come down substantially as there’s no bank money involved, it is just a transaction. So I think if banks can decide a minimum amount of transaction, the process will be much faster.

Over the months, there has been lot of heartburn over pollution. Do you think the industry should completely do away with diesel cars?
Alot of public perception about this topic is based on wrong information, or the lack of it, and many institutions, which should have read the facts before making their reports and views, have not done so. There are three distinct categories of vehicles — commercial vehicles (CVs),personal vehicles (PVs) and two-wheelers —and all of them have different pollution levels. I am basically concerned with cars, but I will add that CVs have older technology than cars. Cars these days are Euro IV. But CVs are Euro II or Euro III. Pollution from cars is very different. Two-wheelers have old technology; they don’t even have fuel injection technologies. The IIT-Kanpur study says that in NCR, passenger cars, including diesel ones, contribute only 2% of PM 2.5.

On the other hand, two-wheelers contribute 6.6%, and trucks and CVs somewhere around 9.2%. People can’t attack two-wheelers as no one will listen to them, and they can’t attack CVs as food supplies are dependent on them. So who are the easy targets — cars. Diesel cars are Euro IV, and will become Euro-VI by 2016; they are as clean as anything. What about other things? Who is looking into crop burning, fireworks? Nothing has stopped people from buying fireworks.

The current ratio of diesel and petrol is almost moving towards 50:50 — where do you see this headed?
It will decrease to about 40%. After 2020, the price of diesel cars will rise further, and the smaller diesel cars actually will go out of production because a diesel car that costs Rs 5 lakh now, will cost a lakh more after Euro VI norms kick in. The equivalent petrol cars will still be about Rs 4 lakh. So, people will not buy diesel.

Do you see the market maturing towards bigger cars?
Not really, we are moving towards much expensive cars, but not bigger cars.

In India, we don't see enough electric vehicles and hybrids. China has some low-cost electric cars. How do you see this segment evolving in India?
The problem in India is that most cars are parked on the roads. But how can they charge electric vehicles? There is no infrastructure available for charging these vehicles. If they have to park the car on the road, then their location will change every day. So that’s one reason — lack of infrastructure – why electric cars aren't doing well here. It won't sell since people won’t find it easy to charge even if the price comes down. The ultimate answer is hybrids. I think we should work on bringing down the cost of hybrids.

Going forward, what will be the percentage of hybrid cars sold in India?
Suzuki is working very hard to bring down the cost of hybrids. We already have a low-cost mild hybrid which has to be scaled up in terms of getting enhanced fuel economy. The purpose of electric cars is to reduce emission and improve fuel economy, but that can be done with hybrids also. Mild hybrid cars need to be scaled up. Once we get better technology, low-cost hybrid technology will help in increasing the mileage of a petrol or a diesel car by 30-35%. Once that is achieved, then hybrids would take over 40-50% of the market.

Watch: Airbags, ABS in small cars is a premature move: RC Bhargava, Maruti Suzuki