Good move, but many potholes ahead
The Union government’s move to go directly to BS-VI auto emission norms from the current BS-IV—skipping BS-V—is among the most progressive decisions taken in recent times. It also fits in with commitments made at the Paris climate change conference. With many Indian cities being listed among the most polluted cities globally, there was enough pressure to clean up. Delhi, rated the most polluted city in the world, is already in the middle of an odd/even scheme for private cars to reduce pollution. Opting for BS-VI is easier for oil companies because the sulphur content that is at 50 ppm in BS-IV falls to 10 ppm in BS-V and stays the same in BS-VI. The big difference is not just in going directly for BS-VI, but that it will be rolled out nationwide at a go in 2020. Currently, only 30 cities have adopted BS-IV fuel standards, despite being rolled out in the metros in 2010. The whole country will adopt BS-IV only by April 2017.
The three parties that are impacted by this decision are automobile, auto-components and petroleum refining companies. According to the government, oil PSUs would need to invest Rs 28,750 crore for the upgrade. However, the National Auto Fuel Policy by the Standing Committee on Petroleum & Natural Gas estimates that Rs 80,000 crore would be needed for upgrading fuel quality. While the impact on Indian Oil with 10 refineries alone would be in the region of Rs 15,000 crore, the newer private refineries are already Euro VI compliant.
The problem for the automobile companies is a bit more complicated. Cars made by European and Japanese companies in India already comply with tougher fuel norms since these are exported to European nations. The problem lies with cheaper cars that cater largely to the domestic market. Also, as car industry officials point out, it will take at least three years of on-road testing with BS-VI fuel before cars can be cleared. That has more to do with Indian weather, traffic and road conditions. Add to that the upgradation that auto component vendors need to do to meet stringent auto company requirements, it will be a while before there are BS-VI fuel ready vehicles out of India. By all means, skipping to BS-VI a positive step. But there are issues that need to be sorted out quickly before it can be implemented.