BackIn pursuit of blue skies
Car makers agree with direct shift to BS-VI norms but want the govt to play its part as well
Premium
New Delhi: Pawan Goenka is upset.
Every now and then, someone or the other asks the executive director of Mahindra and Mahindra Ltd why auto makers always react to changes in regulation instead of anticipating and implementing such moves.
A case in point is the government’s decision to introduce the world’s toughest auto emission standards in India by 2020 ahead of time and skipping an intermediate stage, a decision that has met resistance from the industry.
“This is really unfortunate and gets me upset. It is such a wrong view that everybody has about us. Why don’t you count what the auto industry has done? In 10 years, we have gone through three emission norms—BS-II, BS-III, BS-IV," Goenka reacted to a question in January about the reluctance to switch to Bharat Stage-VI norms, skipping BS-V.
Though the auto industry is okay with BS-VI for new models from 2020, it wants more time to upgrade current models to comply with the new norms. It also wants BS-VI fuel made available across India, unlike BS-IV fuel which is sold only in top 50 cities even five years after moving to that standard.
Goenka estimates that the industry will need to invest ₹ 50-100 crore per model to comply with BS-VI norms. Including necessary investments by auto suppliers, total investment by the industry is pegged at ₹ 50,000- ₹ 60,000 crore.
Naturally, Goenka is exasperated. “It is very easy to say. (But) where does the investment come from? Money does not grow on trees!" he said.
Tougher standards is the biggest, but not the only problem facing the automobile industry. The other is a general shift away from diesel following removal of subsidies, greater public perception that it is a dirty fuel, and a recent court direction. The World Health Organization, in a 2014 study, had found Delhi to be the most polluted city in the world.
Market shake-up
The Supreme Court on 16 December 2015 barred registration of diesel vehicles with engines bigger than 2,000cc in Delhi till 31 March. Among the affected: Mahindra and Mahindra, Tata Motors Ltd and Mercedes-Benz India Ltd.
Even though National Capital Region accounts for only 7% of India’s auto sales, the steps aim to bring in cleaner technologies, which may require several adjustments by auto makers. This includes CNG (compressed natural gas) vehicles, hybrid and electric vehicles, downsizing diesel engines to meet revised norms, finding newer export markets for diesel engines and sharpening focus on petrol models. It may even shake up the market with some segments like the multi-purpose vehicle.
In commercial vehicles, such as trucks and buses, a BS-IV engine emits considerably less particulate matter (soot) than a BS-III engine. However, advancing to BS-V makes no change in particulate matter emission.
Upgrading to BS-VI brings down particulate matter emissions again.
“So, they (CV makers) have to put DPF (diesel particulate filter) or SCR (selective catalytic reduction). If someone has to install SCR, they will have to put a urea tank," said C.V. Raman, head of engineering and research and development, Maruti Suzuki India Ltd.
DPF and SCR are technologies used to reduce pollution. Diesel particulate filters are fitted to remove particulate matter from vehicle exhaust. In selective catalytic reduction, exhaust gas is mixed with urea in the presence of catalyst, which removes toxic nitrous oxides from the exhaust.
According to Maruti’s Raman, the government will have to make urea available everywhere, and someone has to make sure that the “fellow puts urea in the fuel tank for dousing". “Then, that will have to be checked regularly."
To be sure, there is no established inspection and maintenance regime in India though it was first proposed in 1998. Also, India is heavily import-dependent on urea, the most widely-used and subsidised fertilizer in the country. Every year, India imports over a quarter of its urea requirement. In 2014-15, of the 31 million tonnes urea consumed domestically, 8.75 million tonnes were imported.
The auto industry was hit by a contraction in passenger vehicle sales in 2013-14, and minuscule growth in 2014-15, after 11 years of growth. The companies weathered the storm, but discerning customers then began looking for world-class vehicles. Auto makers now have to comply with greater regulations on vehicle safety and star ratings based on corporate average fuel efficiency (CAFE), even as BS-VI looms large.
The additional investments will make vehicles expensive, but it remains to be seen if that will discourage customers, said Kenichi Ayukawa, managing director, Maruti Suzuki India Ltd. “Upgradation to BS-VI norms may alone increase cost of diesel vehicles by ₹ 1 lakh," Ayukawa said. “The point is how to minimize that cost." Due to the environmental concerns, cars, power-train and engines will shift towards the small, compact side, Ayukawa said.
“But, that will be a global phenomenon, and that is in line with India’s plan to become a small car hub," he said.
According to a report by Indian Institute of Technology, Kanpur, cars and jeeps emit less than 10% of particulate matter while trucks are the bigger culprits. A big contributor to Delhi’s air pollution is road dust that accounts for about 35% of tiny particles known as PM2.5 in the air, followed by vehicles.
Other contributors are domestic cooking, power plants and industries. Vehicle emissions account for an average of 25% PM 2.5 levels, going up to 36% in the winters. Trucks and two-wheelers account for larger chunks of PM 2.5 pollution than passenger cars’ contribution of 14-15% to overall vehicle emissions.
Mint has reviewed a copy of the report.
Anumita Roychowdhury, the executive director of the Centre for Science and Environment (CSE), a Delhi-based think tank, said vehicles contribute much more than other key pollution sources like trash burning and construction dust.
“If secondary particulate matters are considered, formed by gases emitted by vehicles and industry, vehicles share to overall pollution gets further enhanced. This helps us to understand the danger from vehicular emissions," Roychowdhury said. She advised auto industry to invest early for profitable long-term growth.
“Global experience shows direct leapfrog to BS-VI standards makes more economic sense than spreading investments over several incremental steps. Also, across industry, improving and integrating resource efficiency makes both business and environmental sense," she said, adding environment regulations will govern markets across the world and set the terms of manufacturing and trade.
India has its own target of reducing the energy intensity of its gross domestic product (GDP) by 35%, as stated in its Intended Nationally Determined Contributions (INDCs) submitted to the UN. Industry will have to deliver on this target.
Ayukawa of Maruti added that India needs to think holistically if it wants to curb pollution. “Pollution is an issue and we are also contributing to it. But, unfortunately, SC decision is not a solution to improve the air quality," Ayukawa said.
For years, India subsidized diesel, driving up sales of diesel vehicles. Once the subsidies vanished, buyers switched to petrol.
While the government wants industry to grow, it won’t compromise on pollution, Nitin Gadkari, the minister for road transport & highways, recently told Mint.
“We will solve problems step by step. I have appealed to them if you have any practical problem, then you come to me. We will try to find out the solutions," Gadkari had said.
Delhi experimented with a road rationing scheme for a fortnight, restricting odd and even-numbered cars from roads on alternate days. The scheme saw a high level of compliance and the government claimed it did slash pollution levels. Delhi chief minister Arvind Kejriwal has since requested citizens’ feedback by 8 February and asked members of the legislative assembly to hold public consultations.
It remains to be seen if such schemes could be implemented across the country. If that happens, it will make matters worse for automakers, said Kumar Kandaswami, senior director, Deloitte Touche Tohmatsu India Pvt. Ltd. “Until then, everyone will be in wait and watch mode," he said.
Pretika Khanna in New Delhi contributed to this story.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
