The Indian auto industry will have to upgrade to BS5 emission norms by the year 2021 making way for cleaner and greener motoring but this will only be possible if the oil companies are ready to invest a whopping Rs 80,000 crore over the next few years to upgrade the quality of fuel and consequently improve the emission norms.
A report from Economic Times states that an expert committee setup by the petroleum ministry in this regard has recommended an upgrade to BS4+ norms by April 1, 2017 and then finally upgrade to BS5 norms by April 1, 2021. This will happen only if the oil companies are ready to invest the required amount. Previously the oil marketing companies has invested Rs 30,000 crore to shift from BS3 to BS4 norms in 2010.
While the BS5 norms are still a long way off, the BS4+ emission norms, as per the committee’s suggestions, should be implemented in the northern states by the next fiscal, followed by the west and the south in April 2016 and the rest of the country by April 2017. In terms of differences, BS4+ fuel has sulphur content 40ppm while BS5 is expected to have just 10ppm.
The manufacturers, for their part, have said that they will not need to make too many changes to their vehicles to comply with the upgraded emission norms but there will be a cost involved in the process of adapting to the intermediate norms.
We expect that there will be a significant cost when the norms change and that at least a small portion of this cost will be passed onto to consumers resulting in higher prices for both petrol and diesel. However, by this time, we also expect that average fuel efficiencies will rise to above 25kmpl for petrol and 30-32kmpl for diesel engines allowing consumers to offset the additional costs.
