Indian Government’s Decision To Automobile Industry


The Indian government’s decision to pull forward the application of stricter emissions standards to meet global norms has sent the automobile and lubricant industry into a spin and means investments of billions of dollars over the next few years, costs that will be inevitably passed on to vehicle buyers.

India, a country of 170 million vehicles, lags the West’s auto emissions standards. Based on European regulations, the country first adopted its own set of norms, known as Bharat Stage (BS), in April 2000. It has been implementing them in phases to reduce chronic air pollution.

According to a report by environmental protection group Greenpeace, 1.2 million Indians died of air pollution-related diseases in 2016 at a cost of 3 percent of GDP.

The current BS-IV norm, which is roughly equivalent to Europe’s Euro IV standard, was introduced in 2010 and implemented across India from April this year. It bans the sale of all vehicles that do not comply.

Original equipment manufacturers (OEMs) and lubricant suppliers, however, were surprised when Transport Minister Nitin Gadkari last year announced that India would jump from BS-IV to BS-VI grade fuels from April 1, 2020, skipping the BS-V phase altogether.

The government originally planned to implement BS-VI for all vehicles from April 2024 but later decided to pull forward the rollout to April 2021.

India, the world’s third-largest carbon emitter after China and the United States, implemented the country’s first passenger vehicle fuel efficiency standards in April 2017 and the norms will become stringent from April 2022 onwards.

The government’s urgency to implement tighter emissions norms is understandable as India is a signatory to the Paris Agreement on Climate Change.

As part of the agreement, the country has to reduce the emissions intensity of its economy by 33 to 35 percent by 2030 from 2005 levels of roughly 1.07 metric tons per capita.

The current BS-IV norms in India, one of the largest automobile markets in the world, allow diesel cars to emit three times more nitrogen oxide (NOx) than gasoline cars, but emissions benefits from BS-VI will be significant as this difference will be reduced to 1.3 times, according to the New Delhi-based think-tank Centre for Science and Environment (CSE).

“This is a game-changer decision and will help India leapfrog to much cleaner emissions,” CSE Executive Director Anumita Roy Chowdhury said in a statement.

“This will reduce the time lag with Europe to six years in 2020 and lower the pollution impacts of the new vehicle fleet considerably.”

The Indian automotive industry, which includes two, three and four wheelers, is likely to grow to between U.S. $252 billion and $295 billion by 2026 from approximately $73 billion in 2015, according to industry body Society of Indian Automobile Manufacturers.

The CSE said the shift to BS-VI standards will reduce particulate matter (PM), which affects air quality and human health, by 82 percent and NOx emissions by 68 percent in cars.

In two-wheelers, PM would reduce by 89 percent and NOx emissions by 76 percent. Similarly, in heavy-duty vehicles such as trucks and buses, PM and NOx emissions will drop by 50 percent and 89 percent, respectively.

This report has made on an article of Lubes N Greases

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