Automakers face tough test in clean drive

 For the auto industry, 2020 was the year when India would become the third largest car producing nation after  China and the US. Today, this year has gained far more significance with the Centre categorical that the country needs to have BS VI emission norms in place by 2020.

Simply put, automakers have less than 2,000 days to upgrade the technology at substantial investments while hoping that there are enough fuel supplies in place to meet this daunting challenge. The experience in the recent past has not been too encouraging with a lag of nearly three years in putting BS IV norms in place.

These come into effect across the country from April 1, 2017 which means that the industry should aim for a two-fold jump in the next three years while completely bypassing BS V norms.

The second auto fuel policy (2015-2025) defined a roadmap of moving to BS V in 2020 and BS VI in 2024 though the Centre eventually decided to advance BS V to 2019 and BS VI to 2023 subject to availability of fuel.

While auto industry representatives agree that cleaner emissions are welcome, they say some thought should also be given to vehicular safety especially in a country which heads the world in road deaths. According to them, jumping emission norms without adequate safety validation could be a risky proposition. As an official puts it, it is important to understand that taking rash decisions without considering technical issues may lead to other difficult challenges which could result in more kneejerk measures.

Shifting gears The auto sector had constantly maintained that it made more sense to have BS V introduced from 2019. In its view, there was little point heading out straight to BS VI as any technology upgrade would require a gradual process of change. Officials also cautioned that skipping BS V and moving to BS VI in 2020 could come in the way of cutting down particulate matter (PM) from passenger cars by a year. In addition, there was no real reduction in PM emissions from cars while moving from BS V to BS VI.

Clearly, the Centre’s reaction has been prompted by the clean air drive in Delhi which has completely unsettled automakers and raised serious questions about consistency in policies. For instance, diesel cars and SUVs with engine capacities of over 2000cc have been banned for three months with the Supreme Court now contemplating extending this to all diesel cars.

However, the bigger question is: can the industry achieve BS VI norms without a glitch? On the face of it, there are no issues even though this means spending tens of thousands of crores on new technology. These costs will have to be passed on to the customer and such a move could meet with some serious resistance in a price-sensitive market like India.

Yet, one could always argue that the biggest priority is clean air and automakers have no quibbles with this argument. The only problem is that they will really need to pull out all stops in prioritising future investments and ensuring that ancillary suppliers also rise to the challenge.  

Bearing the brunt This is already happening in the two-wheeler sector where companies like Honda Motorcycle & Scooter India have already gone on record to say that the whole of 2016 will be spent on retrofitting scooters and motorcycles to meet BS IV norms that kick in 2017. Auto sector officials believe that they are facing the rough end of the stick for no apparent reason even while they have played their roles responsibly in the quest for clean air . It is their contention that the industry took the lead in earlier years while moving from BS I to IV norms at a quick pace compared to any other country.

This momentum, sources add, would have continued to the next level of BS V and BS VI emission norms every five years thereafter if only the right fuel had been made available. While the auto sector maintains it should be exonerated for any lapses in the emissions battle, the oil companies likewise hold their own and insist they cannot be blamed either.

In all fairness, the latter had its own set of problems from 2008 onwards when crude prices spiralled out of control and they were nearly broke selling fuel at huge subsidies. Today, things are a lot better with deregulation of diesel and petrol prices following a sharp fall in crude prices to less than $40/barrel.

As a result, oil companies will need to spend barely ₹30,000 crore (against the earlier projected ₹85,000 crore) to ensure cleaner fuel supplies in 2020. However, they could be in for trouble if crude prices start climbing abruptly and put them on the backfoot all over again.

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