Automakers give thumbs-up to Delhi BS-VI fuel plan

The government's decision on Wednesday to advance the introduction of BS-VI compliant fuel in Delhi-NCR region by two years starting April 1 of 2018 was welcomed by the auto industry though concerns remained.

Sceptics are worried that despite the claims whether the oil marketing companies (OMC)s will be able to supply the required grade fuel in sufficient quantity.

Interestingly, one of the major claims of the vehicle manufacturers during migration from BS-III to BS-IV norms was that the fuel was not readily available, and therefore it made no sense for them to make BS-IV vehicle before the deadline.

Society of Indian Automobile Manufacturers (SIAM), a lobby group for automakers, said it was a step in the right direction as it is similar to the developed countries, where the higher grade of fuel is introduced couple of years prior to the introduction of higher emission norms for vehicles.

Abhay Firodia, president, SIAM said that the early introduction of BS- VI fuel gives confidence to the auto industry that BS VI fuel will be available across the country from April 1, 2020, when the auto industry will fully migrate to manufacturing only BS -VI compliant vehicles on a pan-India basis.

Pawan Goenka, MD, at M&M said though the decision is in the right direction to fight pollution in Delhi, he does not see any mainline player with multiple models being able to launch complete portfolio of BS-VI complaint vehicle by April 2018. "We at Mahindra are working on all our ongoing projects with the April 2020 deadline in mind," he said.

Another major problem, according to Goenka, launching of BS-VI vehicles only for Delhi is also not feasible as the fuel will not be available outside the capital and BS-VI vehicles cannot run on BS-IV fuel.

The automobile industry is among the fastest in the world, contributing about 7.5% of the GDP. India is already the largest market for two-wheelers with over 17.7 million units sold last year.

Sridhar V, partner, Grant Thornton India, said this is a challenge thrown by the fuel marketing companies and government in making availability of this grade of fuel much ahead of 2020 deadline, though in the limited context of Delhi now.

"Questions like whether this will change Delhi atmosphere is irrelevant since small steps lead to a giant leap" said Sridhar.

The government had earlier mandated deadline of April 1, 2020 for 'leap-frogging' to BS-VI fuel norms from BS-III by skipping the BS-V in the intermediate. BS-VI is the cleanest form of fuel and is similar to the ones used in advanced countries as it offers better and cleaner fuel.

Ironically, migration to BS-IV from BS-III was not without drama as most of the vehicle manufacturers following the earlier precedent were assuming that the deadline would be extended beyond April 1, 2017. Even if does not get extended by the government will still make April 1 as the deadline for production of BS-III vehicle and not its registration.

However, much to their dismay some of the rivals, including Pune-based Bajaj Auto who had already become BS-IV compliant approached the Supreme Court alleging that the rivals have been dragging the implementation of BS-IV for making last minute gains at the cost of other manufacturers ' who complied with the law'.

The apex court, accepting Bajaj Auto's position ordered the strict implementation of April 1 leaving thousands of units of inventory in uncertainty and causing losses over Rs 12,000 crore to the industry collectively. The manufacturers affected by it were then left with no option but to upgrade the vehicle to BS-IV at substantial cost or export it to a market where it is still acceptable.

FOR CLEAN AIR

• The move is similar to developed countries where the higher grade of fuel is introduced first
   
• However, sceptics are worried if the OMCs will be able to supply the required grade fuel in sufficient quantity