Cleaning up auto

Rajiv Bajaj, Managing Director of Bajaj Auto, declared recently that a large part of the auto industry was dragging its feet on the Bharat Stage IV emissions issue. These norms come into effect nationwide from April 1 and, as in the past, this signals the date of production of cleaner vehicles. Yet, Bajaj expressed the view that ideally only BS IV-compliant vehicles should be registered from that date. For a country whose citizens are gasping for clean air, nobody should have a problem with what Bajaj says. From a regulatory standpoint as well, setting a clear deadline for registrations is better than setting a manufacturing deadline. After all, manufacturers may want to continue to manufacture non-compliant vehicles, for sale in other markets, but it is the Centre’s responsibility to ensure that emission standards are met by any vehicle meant to ply in the Indian market. The only problem here is that some manufacturers have quite a pile-up of BS III inventories at their dealerships. The projections for March 31 indicate nearly 7.5 lakh two-wheelers and 75,000 commercial vehicles. But this is because manufacturers clearly appear to have gambled that the regulatory dice will roll in their favour.

The Environment Pollution (Prevention and Control) Authority, which is spearheading the drive for cleaner emissions, had apparently made it clear that given the high volumes at stake, manufacturers would be given time from April 1, 2016, to begin the transition to BS IV. Effectively, this meant a complete year to gradually extinguish BS III stocks while kicking off the process of readying BS IV models. Many auto-makers have pulled out all stops to meet the deadline and are ready with their BS IV range. Passenger car inventories are projected to be just 20,000 units by end-March with three-wheelers at 45,000 units.

The big issue is then tackling two-wheeler and truck stocks. Truck-makers contend that their production cycle is more complicated since it involves body-building too. In addition, this is a B2B industry where the end-user is quite different from the retail buyer. However, the two-wheeler industry cannot put up the same defence. Bajaj Auto has indicated that it only produces BS IV models while TVS Motor will also meet the April 1 deadline with cleaner vehicles at its dealerships. There is no reason why stocks of 7.5 lakh BS III bikes are being projected for March 31 unless some companies have just been pumping two-wheelers into dealerships. Rather than extend the deadline for dealer inventories, the Centre should reward those who have taken the lead. As for the rest, the principle of ‘polluter pays’ should kick in.

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