Mahindra's UDO compact two-seater electric mobility pod at the Auto-Expo 2018 in New Delhi. Sajjad Hussain/AFP
Mahindra's UDO compact two-seater electric mobility pod at the Auto-Expo 2018 in New Delhi. Sajjad Hussain/AFP
Mahindra's UDO compact two-seater electric mobility pod at the Auto-Expo 2018 in New Delhi. Sajjad Hussain/AFP
Mahindra's UDO compact two-seater electric mobility pod at the Auto-Expo 2018 in New Delhi. Sajjad Hussain/AFP

Lack of clarity spurs concern on Indian electric cars


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Sohinder Gill, the director of corporate affairs at the Society of Manufacturers of Electric Vehicles (SMEV), which represents Indian electric vehicle (EV) and electric vehicle components makers, talks to The National about his concerns for the development of the electric transportation sector in India.

India's road transport minister has been reported as saying that there is no need for an electric vehicle policy. What is your reaction to this?

Frankly, as an association, we are quite confused and we are seeking clarification from the government because we heard them say that India wants to go for zero emissions mobility, so we fail to understand why this lack of focus is there on electric vehicles now.

Why do you think the minister Nitin Gadkari said this?

Mr Gadkari said that electric cars are not yet ready, but there are products in India which have been ready for the last six years and are already on the road, generally two-wheelers and three-wheelers, for which no such waiting period is required. There are more than 500,000 electric two-wheelers on the road. [Mr Gadkari's position] is a setback.

What will SMEV do now?

We need to get clarification from the ministers or if required from the prime minister on which sort of direction the industry should take on investments and action.

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How will this impact car manufacturers?

Mahindra and Tata are the ones that are ready and they've been investing. Whether they will be left alone without subsidies or incentives, no one really knows. All we are expecting is at least the current incentive scheme will continue as it is. If that happens it's a bit of saving grace for the existing players. Otherwise the industry's going to collapse.

What do you think the government might do next in this sector?

They perhaps have other options available. India is a country is very keen to do alternate fuels which is understandable because India can produce ethanol. Similarly, [multinational corporations] say that hybrids is the right answer, so all that might be why there's a reconsideration.

What other effects might arise?

Already people were sitting on the fence and were not investing, so this is going to create another question mark. Also, so many companies were making losses and they were seeking investors and start-ups were getting a lot of money from investors and bigger electric vehicle companies were getting investment. Those investors are going to be shy of investing into India until the policy is clear.

Anghami
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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