manufacturer Cummins to Invest $1 Billion in India
The Cummins Group intends to invest approximately $1 billion in its India operations and hire 4,000 people over the next decade as the global engine and power generation product manufacturer prepares for the transition from traditional fossil fuel engines to those powered by hydrogen and other green energy options.
“We have invested a billion dollars in India over the past 15 years,” said Ashwath Ram, managing director, of Cummins Group, India.
“We plan to invest a similar amount over the next decade to be able to transition from the current technologies to new ones.”
Cummins conducts the majority of its automotive business in India through Tata Cummins, with some investments also made through subsidiary companies.
Cummins signed a definitive agreement with Tata Motors in April of this year to manufacture a range of low-to-zero-emissions technology products in India over the next few years.
The two companies have formed a new company called TCPL Green Energy Solutions (GES), which will begin operations in fiscal year 25.
Meanwhile, Cummins India (CIL) plans to double its investment in the coming years to ‘350 crore to ‘400 crore per annum as it collaborates with various automakers to transition to green mobility.
“Our investment is set to go up significantly, doubling in the coming years as compared with the past two to three years. Many more technology-intensive products are being developed which will increase our capex cycle,” said Ram.
Cummins has spent the last decade investing in infrastructure. This has shifted to investing in growth-oriented products to facilitate entry into new segments, markets, and business electrification. Internal accruals will be used by CIL to meet the funding requirement.
Cummins Group, a participant in the government’s productivity-linked incentive (PLI) scheme, intends to invest Rs1,000 crore in India over five years beginning in the fiscal year 2022-23. This includes technology investments but excludes capital expenditures for infrastructure development, according to Ram.
Cummins has benefited from stricter emission regulations. The advancements assisted the company in moving up the value chain and becoming a manufacturer of sophisticated parts with high electronic content.
According to Ram, India is no longer lagging behind the rest of the world in terms of emission standards, citing the transition from Central Pollution Control Board (CPCB) II to CPCB IV + genset norms as an example. The new regulations will make generators less fuel efficient and more expensive beginning July 1.
“The transition in emission norms may need 30-50% price hikes in the sub-800kW genset range. The sharp price difference will likely boost pre-buying and aid 1QFY24F sales and EBITDA,” wrote Priyankar Biswas, analyst, at Nomura Research, in a recent report.
Content Credit: THE ECONOMICS TIME