While the industry shares the government’s concern surrounding the rise in pollution, it has called for consistency in government’s approach in policy-making.
11 May 2016 | 4780 Views | By Nishant Parekh, Autocar India
The government’s recent thrust to combat the increasing levels of pollution in the country has forced automakers back to their drawing boards to restructure investments and strategies. While they share the government’s concern surrounding the rise in pollution, automakers have called for consistency in government’s approach in policy-making.
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The government’s recent thrust to combat the increasing levels of pollution in the country has forced automakers back to their drawing boards to restructure investments and strategies. While they share the government’s concern surrounding the rise in pollution, automakers have called for consistency in government’s approach in policy-making.
Earlier this year, Nitin Gadkari, Minister of Road Transport and Highways, announced the government’s decision to pass over the BS-V emission standards and directly implement BS-VI across the country from April 1, 2020. Before that, the previous plan laid out in October last year was for BS-V norms to be applied from 2019, followed by BS-VI in 2023. The original plan mandated that India move to BS-VI only in 2024.
“This kind of policy or policy change by the government in such an abrupt manner creates a lot of financial pressure and also pressure in terms of the direction in which the investments should be done,” RS Kalsi, executive director, marketing and sales, Maruti Suzuki India said at a panel discussion conducted by Autocar India recently on ‘The auto industry and market 2020 and beyond’.
While companies such as Toyota – which are prominent in Europe and other countries that implement strict engine emission standards – already have some Euro-VI compliant cars, manufacturers based in India are likely to have to invest heavily to meet those emissions standards.
Rakesh Srivastava, senior vice-president (Sales and Marketing), Hyundai Motor India, who was also part of the four-member panel, said that technological requirement wasn’t the key challenge since the required technology was being exported via cars sent abroad. “While manufacturers would face the challenge of capital investment at some level, I think the biggest challenge would be at the level of the component manufacturers where they have to also invest in terms of bringing in the right technology,” he explained. For instance, suppliers will have to invest in a diesel particulate filter and selective catalytic reduction module to support BS-VI compliant cars.
Initial estimates suggest around Rs 50,000-80,000 crore will have to be invested by carmakers to upgrade the four-wheeler engines to make them BS-VI compliant. Refiners will have to invest around Rs 30,000 crore to provide the requisite fuel.
“What the auto industry would require is for advance time so that every stake holder is involved into it and can bring in the right kind of inputs in terms of the technology,” Srivastava added.
Impact on vehicle cost
The government’s decision to leapfrog to BS-VI across the country from April 1, 2020, will most likely drive up costs of the vehicles, more so on diesel and with gap in fuel prices narrowing the petrol-diesel equation could change.
“The major challenge would be the cost impact, and finally the customer will have to pay for it. The cost impact on diesel vehicles would be nearly five or six times of what it will have on the petrol technology. So the entire equation between petrol and diesel models in terms of their price-to-value equation may change. And at the same time, the gap between petrol and diesel prices has narrowed down,” Kalsi said, adding that an off-shoot of this would be more focus on mild hybrid, full hybrid and electric vehicle technologies.
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