Pune at the Vanguard: Charting a Just Transition for Maharashtra’s Automobile Sector

iFOREST Report Advocates Equitable Shift Towards Electric Vehicles and Sustainable Mobility

The International Forum for Environment, Sustainability, and Technology (iFOREST), a renowned environmental think tank, recently published the inaugural comprehensive analysis detailing the effects of the transition to Electric Vehicles (EVs) on Maharashtra’s automotive industry, workforce, and ecological landscape. This report delineates a holistic strategy for a just transition within the automotive sector, aiming to yield positive environmental and socio-economic outcomes.

In addition to the Maharashtra-focused study, iFOREST unveiled a compendium comprising five distinct analyses exploring various facets of the shift from internal combustion engine vehicles to EVs. These studies encompass a range of topics, including the ramifications for auto component manufacturers, the influence on auto clusters serving as manufacturing and employment nuclei, and the effects on employment.

The unveiling of the iFOREST reports occurred during a public event in Pune, attracting a diverse array of stakeholders, such as prominent members of civil society, government officials, industry representatives, auto cluster leaders, skill development agencies, and think tanks.

During the event’s inauguration, Dr. Raghunath Mashelkar, a distinguished scientist and Fellow of the Royal Society (awarded Padma Vibhushan), emphasized the necessity for synchronized technology development, policy formulation, and strategic planning to effectively allocate resources in support of the transition.

Dr. Ajit Ranade, Vice Chancellor of Gokhale Institute of Politics and Economics, underscored the inevitability of the EV transition and stressed the importance of crafting policies to safeguard workers, not just jobs.

Dr. Amitav Mallik, Founding Member of Pune International Centre (recipient of Padma Shri), highlighted the inexorable shifts towards both energy and automobile transitions, advocating for a paradigmatic shift from vehicle ownership to vehicle sharing.

Prashant Girbane, Director General at Mahratta Chamber of Commerce, Industries & Agriculture (MCCIA), pledged support from the Chamber of Commerce in areas such as skill development, technology enhancement, and bolstering clusters, particularly Small and Medium Enterprises (SMEs), to facilitate a just transition within the automobile sector.

Abhijit Ghorpade, Director of the State Action Climate Cell, Department of Environment and Climate Change, Government of Maharashtra, emphasized the imperative need for a comprehensive state just transition policy to facilitate a well-coordinated transition. He stressed the significance of developing tailored plans for regional clusters to ensure comprehensive intervention.

Dr. Chandra Bhushan, CEO of iFOREST, emphasized the paramount importance of effecting a just transition within the automobile sector, given its substantial employment generation across the value chain. He underscored the need for concurrent advancements in technology and human resource development to capitalize fully on technological capabilities while minimizing job displacement and enhancing job prospects.

Key Findings and Recommendations

• Based on modeling projections conducted by iFOREST, India is anticipated to undergo a substantial Electric Vehicle (EV) penetration in total vehicle manufacturing over the next 10-12 years across various policy scenarios.
• Maharashtra, renowned as India’s automotive hub, is leading the EV transition due to favorable State EV Policy and central initiatives such as FAME. Notably, Maharashtra contributes 12.6% of total EV sales nationwide, with the highest sales recorded for both 2-wheelers and 4-wheelers.
• The shift from Internal Combustion Engine (ICE) to EVs will render approximately 90-100% of powertrain parts of an ICE vehicle obsolete, contingent upon the vehicle type. Consequently, there will be a notable impact on the operations of auto component manufacturers (ACMs) as they will need to supply fewer parts.
• A study examining the Pune auto cluster indicates that 25% of ACMs will face significant or moderate impacts due to shifting demands within the EV ecosystem.
• Micro, Small, and Medium Enterprises (MSMEs), constituting 97% of ACMs, are particularly susceptible to these changes owing to their limited financial resources and technological capacity.
• The repercussions on MSMEs will extend to a substantial number of contractual and informal workers associated with these enterprises, with approximately 60% of workers in ACMs categorized as contractual or informal, especially in micro and small enterprises.
• The transition to EVs will significantly alter traditional job roles within the auto sector, impacting various workers. Approximately 31% of job roles will be affected, with 14% becoming obsolete and 17% requiring reskilling, primarily concentrated in the manufacturing segment.
• Despite the disruption to traditional roles, the overall impact on jobs is expected to be positive. Firstly, the EV ecosystem is poised to create 5% new job roles, compensating for some of the traditional roles rendered obsolete. Secondly, although the number of jobs supported by EVs may be slightly lower than ICE vehicles, the penetration of EVs is anticipated to result in a net increase in jobs within the automobile sector.
• Overall, six districts in Maharashtra are identified as vulnerable to the EV transition due to the concentration of manufacturing units and high employment dependence. These districts—Pune, Nashik, Aurangabad, Mumbai (Suburban), Thane, and Kolhapur— collectively account for 65% of automobile units in the state and 83% of the formal workforce.

In light of the anticipated impacts, the iFOREST report advocates for the implementation of a comprehensive ‘Just Transition Policy Framework for the Automobile Sector in Maharashtra,’ emphasizing eight key interconnected policy dimensions. Noteworthy policies within this framework include:

1. Initiatives and investments aimed at positioning Maharashtra as an innovation hub for clean mobility solutions.
2. Fiscal measures designed to support Original Equipment Manufacturers (OEMs) and Auto Component Manufacturers (ACMs) in adopting environmentally sustainable manufacturing practices.
3. Policy interventions to enhance skilling and reskilling initiatives aligned with the evolving EV ecosystem.
4. Establishment of a dedicated “Skill Development Fund” specifically targeted at assisting informal and low-skilled workers.
5. Mandating the formulation of a Workforce Transition Plan by OEMs to reinforce enterprise-level strategies.
6. Implementation of a Right to Repair and Servicing Policy to mitigate the vulnerability of workers engaged in servicing and repair activities.
7. Development of Cluster Plans for each auto cluster to mitigate vulnerabilities and facilitate a well-coordinated transition.
8. Emphasizing collaborative engagement among the state government, district administration, industry bodies, skilling agencies, and research institutions to ensure a cohesive approach.

Dr. Raghunath Mashelkar emphasized the overarching goal of transitioning from Internal Combustion Engine (ICE) vehicles to Electric Vehicles (EVs) as a holistic transformation. He highlighted Pune’s rich institutional landscape as a resource for innovation and knowledge creation, suggesting collective leveraging of these assets to drive green growth in the auto sector, enhance employability, foster job creation within the burgeoning EV ecosystem, and promote positive environmental outcomes.