Renault urges regulatory clarity in India in the midst of new investment plans

With less than a 2% share in India’s thriving auto market, Renault is strategically planning further investments while emphasizing the importance of regulatory discipline.

French automaker Renault is advocating for consistent regulatory frameworks in India as it gears up for new investments, citing concerns over unnecessary engineering costs resulting from regulatory uncertainties. With less than a 2% share in India’s thriving auto market, Renault is strategically planning further investments while emphasizing the importance of regulatory discipline.

The issue stems from New Delhi’s decision not to implement a proposal mandating six airbags in cars, a move that incurred substantial engineering costs for Renault. The proposed regulation, initially set to be effective from October 1, 2023, was left unfinalized months before the deadline, prompting Renault to re-engineer its vehicles and suppliers to prepare for the mandated changes.

In an interview, Renault’s Country Head in India, Venkatram Mamillapalle, expressed concerns about the incurred “sunk cost” in engineering and revealed a shift in strategy. Going forward, Renault intends to wait for final regulations before implementing changes, highlighting the need for government adherence to laid-down regulatory paths.

Mamillapalle emphasized that if the government establishes a regulatory path, it should be followed. He highlighted the significant financial impact of complying with regulatory changes, disclosing that automakers could incur costs in the millions of euros.

Renault’s concerns mirror broader apprehensions within the automotive industry in India. Last year, Transport Minister Nitin Gadkari’s warning of higher taxes for automakers not reducing diesel vehicle production caused a temporary stock market downturn, emphasizing the industry’s vulnerability to regulatory uncertainties.

Despite a decline in domestic sales last year, Mamillapalle emphasized Renault’s commitment to a growth plan in India, focusing on profitability rather than market share. The company is set to launch upgraded variants of existing models, including the popular Duster SUV, the small car Kwid, the seven-seater Triber, and the SUV Kiger in 2024. These models will feature enhanced technology and connected features, targeting entry-level car buyers.

Renault, in collaboration with alliance partner Nissan, plans to invest $600 million in India over the next three years to boost sales. This investment includes launching five new cars, such as mid-sized SUVs and electric models, starting in 2025. The company envisions continued investment beyond 2027, aligning with a global strategy to invest $3.2 billion in markets outside Europe, with a particular focus on Brazil, India, and Turkey.

Renault affirmed its commitment to strengthening local manufacturing in India, supported by its production plant in the southern city of Chennai. As the automaker navigates the evolving Indian market, regulatory stability emerges as a critical factor shaping future investments and strategic decisions in the region.