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Adopting BS-VI norms will make diesel vehicles costlier
Jun 15, 2016

According to rating agency ICRA, the government’s decision to leapfrog the Bharat Stage (BS)-V Emission Standards and implement the BS-VI norms by April 2020, four years ahead of the earlier schedule, will make diesel vehicles costlier by Rs.70,000 to Rs.1,50,000.

Other issues highlighted: 

  • The diesel segment is likely to witness a sizeable price increase due to introduction of additional components, the note said.
  • This will make diesel passenger vehicles costlier (vis-à-vis petrol variants) and may deter demand for diesel vehicles.
  • The cost of petrol passenger vehicles may increase by 20,000-30,000 per vehicle, while the increase for diesel passenger vehicles could be in the range of Rs.75,000-100,000 per vehicle.
  • For medium and heavy commercial vehicles, the cost differential is expected to be Rs.100,000-150,000 (or 10 per cent of current vehicle cost)
  • As diesel vehicles would require significant technology changes, the cost differential between petrol and diesel passenger vehicles would expand further. This will widen the payback period for diesel vehicles.
  • The narrowing price gap between petrol and diesel, the recent ban on registration of diesel vehicles in the National Capital Region, along with the potential risk of restricting diesel-powered taxis could have significant implications for diesel investments by Original Equipment Manufacturers (OEMs)
  • According to rating agency while availability of technology would not be an issue, the key challenge for OEMs would be adapting the available solutions to Indian market conditions in a short time-frame, in a cost-effective manner.
  • Availability of BS-VI compliant fuel on nationwide basis by 2020 may be a challenge.

What are BS Norms:

Bharat norms are emission control standards put in place by the government to keep a check on air pollution. Based on the European regulations (Euro norms), these standards set specifications/limits for the release of air pollutants from equipment using internal combustion engines, including vehicles. Typically, the higher the stage, the more stringent the norms.

Background

  • India introduced emission norms first in 1991, and tightened them in 1996, when most vehicle manufacturers had to incorporate technology upgrades like catalytic converters to cut exhaust emissions.
  • Fuel specifications based on environmental considerations were notified first in April 1996 — to be implemented by 2000, and incorporated in BIS 2000 standards.
  • Following the landmark Supreme Court order of April 1999, the Centre notified Bharat Stage-I (BIS 2000) and Bharat Stage-II norms, broadly equivalent to Euro I and Euro II respectively.
  • BS-II was for the NCR and other metros; BS-I for the rest of India.
  • From April 2005, in line with the Auto Fuel Policy of 2003, BS-III and BS-II fuel quality norms came into existence for 13 major cities, and for the rest of the country respectively.
  • Subsequently, BS-IV and BS-III fuel quality norms were introduced from April 2010 in 13 major cities and the rest of India respectively.
  • Indian emission standards
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  • As per the roadmap in the auto fuel policy, BS¬V and BS-VI norms were to be implemented from April 1, 2022, and April 1, 2024, respectively. But in November 2015, the Ministry of Road Transport issued a draft notification, advancing the implementation of BS¬V norms for new four-wheel vehicle models to April 1, 2019, and for existing models to April 1, 2020. The corresponding dates for BS-VI norms were brought forward to April 1, 2021, and April 1, 2022, respectively.
  • But the government’s “unanimous decision to leap-frog to BS-VI directly from 1 April, 2020 skipped the BS-V stage all together

About BS VI Norms

In the new emission standard, particulate matter (PM) emission for diesel cars would be 80 per cent less than BS-IV and the nitrogen oxide (NOx) level would be 83 per cent lower. The sulphur content in fuel norms for diesel and petrol under both V and VI standards would not change at 10 parts per million, though it is substantially less than the 50 mandated for both fuels under BS-IV.
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