Jumping to Bharat VI - a hasty decision?

In India, the first emission norms were introduced in 1991 for petrol vehicles, and in 1992 for diesel vehicles. These norms were then followed by making the catalytic converter mandatory for petrol vehicles and unleaded petrol was introduced in the Indian market. Emission norms are essentially regulations to control the output of air pollutants from internal combustion engine equipment, including motor vehicles.

From Bharat I to IV

Looking at the increased pollution levels, in April 1999, the Supreme Court ruled that all vehicles in India have to meet Euro I or India 2000 norms by June 1, 1999, and Euro II should be made mandatory in the NCR from April 2000.

Oil companies as well as Original Equipment Manufacturers (OEMs) were not prepared for this transition. Therefore, the implementation date of Euro II was not enforced. In addition, India did not have a comprehensive fuel policy before 2001.

In order to have a structured framework to address the emission issue, the government constituted two committees in the past to lay down auto fuel vision, and the government has accepted the recommendations made by these committees. The Indian emission standards, which are based on the European regulations, were first introduced in 2000. Progressively, stringent norms have been rolled out since then.

These two committees, apart from other things, proposed a road map (i.e Bharat Stage (BS) IV across the country by 2017, BS V by 2022, and BS VI by 2024) for the roll out of emission norms in India.

These committees recommended a phased implementation of future emission norms with the regulations being implemented first in the major cities and extended to the rest of the country after a few years. The implementation in a phased manner has been recommended to minimise the social cost and provide transition time for key stake holders  — auto industry and fuel suppliers.

Since October 2010, for four-wheelers, Bharat stage III norms have been enforced across the country, and Bharat stage IV emission norms in certain major cities. Over the years, emissions have reduced because of improved vehicle technology, as well as emission standards from Bharat I to Bharat IV.

Auto scrappage policy

We are not able to get the entire benefits of these standards, because we do not have a vehicle scrappage policy. Also, the emission norms were not implemented simultaneously across the country.

Also, emission standards that were implemented long ago have not been enforced so far. The gradual implementation of emission norms across the country has given space for regulatory arbitrage to customers.

Meanwhile, looking at the increased pollution levels (out of 20 worst cities in the world, 13 cities are in India), increasing vehicle populations (overall vehicle population on roads is roughly 210 million, including two-wheelers, and every year we are adding around 20 million vehicles), and growth in the vehicle population, considering low penetration in future and also taking into account what is happening across the globe on regulation relating to pollution emitted, especially by diesel vehicles, the debate went on to move to BS VI norms at the earliest compared time frame laid by the auto fuel policy.

The advocates of early adoption of emission norms got a push when the National Green  tribunal (NGT) imposed a temporary ban on registration of new diesel vehicles in Delhi, and the subsequent ban on registration of bigger diesel vehicles (over 2000cc) by the Supreme Court.

To address the issue, the government  has recently announced that the country would skip the BS V norms altogether and adopt BS VI norms by 2020 much earlier than envisaged in the auto fuel policy for four-wheelers, and there would be similar requirements for two- and three-wheelers in the future as well.

The move from BS V to BS VI would reduce the overall exhaust gas by about 90 per cent. The move to higher emission norms will have significant costs involved for refineries (roughly between Rs 60,000 crore and Rs 80,000 crore range ), auto-makers  (roughly between Rs 40,000 crore and Rs 60,000 crore range), as well customers in terms of higher prices (10 per cent to 20 per cent and more for diesel vehicles) of vehicles across the board, especially in commercial and passengers vehicles.

The way ahead

We need to implement the vehicle retirement policy across the country, and develop infrastructure for vehicle scrapping and scrap all old vehicles that are over 10 years. 

We can also take the vehicle emission testing architecture to the next level to address the issues noted in the current testing environment from lab testing to on road testing (Indian driving cycle testing program). We also need to implement the fuel efficiency norms standards to improve mileage of vehicles.

The government needs to implement the New Road Transport and Safety Bill 2014 at the earliest. In addition to this, the government has to improve the pollution under check system, as well as vehicle inspection and maintenance system, including infrastructure for effective implementation.

We need to have a proper and effective infrastructure for effective implementation, so that related laws are implemented properly.  Authorities concerned also need to address the issue of spurious spare parts market in India as not having proper parts also contributes to high emission. We need to develop the genuine aftermarket parts. Original Equipment Manufacturers (OEMs) need to do more on educating customers in this area.

We need to provide more incentive for research and development in alternate fuel technology, apart from providing incentives for alternate fuel vehicles. There is a need to develop infrastructure to support alternate fuel vehicles. Lastly, the government should develop and implement sustainable public transport.

(The author is the partner of automobiles at PwC India)