India’s passenger vehicle density to nearly double by 2020

New Delhi: India’s passenger vehicle density is set to double by 2020 on the back of low vehicle penetration and a population in which 66% of the people are below 35 years of age, says a report released by consultancy firm EY on Monday.

While this is good news for the auto industry, it could also lead to regulatory interventions by the government to control rising pollution in Indian cities, a large part of which has been attributed to vehicular emissions.

The report says that the number of passenger vehicles will go up from 29 million in 2015 to more than 48 million vehicles by 2020. “The country’s low vehicle penetration (32 vehicles per 1,000 people in 2015) makes it one of the world’s most attractive auto markets. Owing to its unique demographic dividend, the Indian auto industry has immense growth potential,” the report said.

However, on the flip side, India is also grappling with challenges to reduce pollution. A World Health Organization (WHO) survey of 1,600 cities ranked New Delhi to be the planet’s most polluted urban conglomeration. Thirteen of the 20 cities with the dirtiest air were in India, with New Delhi, Patna, Gwalior and Raipur occupying the top four places, according to a WHO study released in May 2014.

In a single move, the apex court, in December 2015, banned the sale of high-end diesel passenger vehicles with a capacity of 2 litres and above in the National Capital Region (NCR) till 31 March, made it a must for taxis to shift to compressed natural gas (CNG) fuel, doubled entry tax on trucks entering the city limits and took 10-year-old commercial vehicles powered by diesel off roads.

In January, the court barred heavy commercial vehicles from entering Delhi from national highways 2 (Kolkata-Delhi), 10 (Punjab-Delhi) and 58 (Uttarakhand-Ghaziabad-Delhi) as well as state highway 57 (Baghpat-Ghaziabad-Delhi).

More action followed from the government. India will move up to the toughest emission standards of Bharat Stage-VI (BS-VI) from the current BS-IV by 2020, skipping an intermediate level, transport minister Nitin Gadkari said last month. Separately, Gadkari said the government will soon come out with an integrated policy to scrap commercial vehicles that are over 10 years old to check exhaust commissions.

Yet, it doesn’t seem there will be a dearth of investments in the sector. The Indian auto industry is expected to attract investments up to ₹ 60,000 crore over the next few years, the EY report said. “The PV (passenger vehicle) industry has witnessed a revival in new investments after three years of weak investment climate with the anticipation of a recovery in demand,” the report said.