Pawan Goenka believes Mahindra and Tata can compete with Tesla in India

Pawan Goenka, former MD of Mahindra and Mahindra (M&M) and an auto industry veteran, is unconcerned about the global competition that domestic auto players will face due to the government's new electric vehicle (EV) policy.

"I don't think they (Mahindra or Tata) will be at a disadvantage compared to anybody who comes in because they will have fairly good product, fairly good technology, and I think their products will be very competitive. So don't undermine the ability of the Indian players to be able to compete with whoever comes in because of this policy," he said in a conversation with CNBC-TV18.

Goenka's remains confident despite the challenges faced by domestic manufacturers in increasing EV adoption in India, which currently stands at 2-3%, compared to a global average exceeding 15%.

The low domestic adoption, he said, is because of some specific reasons: the shortage of charging infrastructure, the limited number of products available,  and limited localisation, which is both the cause and effect of low volumes.

“If we get 2-3 greenfield plants with plants at around half a billion dollars each because of this (new EV policy), we will start seeing a lot more EV penetration,” he said.

On March 15, the Centre approved an electric vehicle (EV) policy to attract global players to set up manufacturing units in India and avail of lower customs duty and other benefits.

Goenka believes the new policy is a balanced move and good enough for the new players to come in and establish a plant here not just to sell in India, but hopefully to export from India.

According to auto expert, Arun Malhotra, the new policy will help in creating an EV ecosystem and the real action will happen only after 3-4 years.

"It is positive in the long run but in the short- and medium-term, the challenges of range, reach, aspiration, affordability are going to hold back the EV market,” Malhotra said.