China's Goldstone-BYD may lose orders for 130 e-buses over subsidy issues

Electric bus maker Goldstone Infratech, a partner of Chinese electric vehicle major BYD, hit headlines early this year after it bagged orders to supply 290 electric buses, leaving biggies like Tata Motors and Ashok Leyland behind. Tata Motors and Ashok Leyland bagged orders for 190 and 50 buses, respectively. But Goldstone will now only be supplying 160 buses, less than Tata Motors’ 190 buses.

The Department of Heavy Industries has not released the subsidy for 130 buses to states of Karnataka and Telangana with the result that Goldstone is now preparing to supply only 160 buses as there is no feasibility without the subsidy.

“We were the L1 bidder in 290 buses. But we have got the formal award for 160 buses so far as subsidy has been issued for them. For the rest the subsidy has not come yet. It is difficult to say what happens to this order of 130 buses. For our production we are considering 160 buses right now,” N K Rawal, managing director at Goldstone Infratech told Business Standard.

He added that the Department of Heavy Industry (DHI), which released subsidies for a portion of orders, is now working on the second phase of FAME India Scheme (Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India) and so a bigger picture will emerge later. A DHI spokesperson did not respond to queries reason behind non-grant of subsidy for the 130 buses.

When Goldstone bagged orders for 290 e-buses, or more than half of the 540 units that were bid out by various state transport entities together in February, it had upset the traditional commercial vehicle industry players. Many of Goldstone’s peers in the bus industry are wary about the China connection and even doubt the ability of Goldstone to execute the contracts it has bagged. “These contracts, if they are not delivered as promised, tend to skew the perception about the entire market, products and services. In addition, there are contracts where Indian taxpayer funds are being used to subsidise already subsidised products from other countries,” Karthick Athmanathan, head (EV and eMobility Solutions) at country’s biggest bus maker Ashok Leyland said in March.

Some also questioned the localisation claims made by Goldstone, a factor to which grant of subsidies was linked. They are wary about the 35 per cent localisation claimed by Goldstone and insist that the company mostly assembles the buses after importing parts from BYD. The traditional players are learnt to have flagged their concerns to DHI in their representations.

Goldstone-BYD claimed the e-bus orders from Bangalore, Hyderabad and Mumbai under a gross cost contract (GCC) model. Based on the 35 per cent localisation clause, the company will get a sixty per cent subsidy or Rs 10 million (whichever is lower) on these buses, spread over a three year period. Subsidy and payment of bus price is linked to actual performance.

When asked if there is lobbying from competition behind the non-grant of subsidy, Rawal said the company does not ‘bother’. “A volume of 130 units does not upset my plans. Our hands are full and the market is big enough. We are working with all customers and working on what could be the new requirements,” he said. The company is ready to participate in the latest tender floated by Mumbai’s BEST for 200 seven metre electric buses.

Source- Business Standard