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Environmental concerns in Delhi would have a huge impact on Indian auto industry

The recent Supreme Court order aimed at lowering air pollution levels in the national capital within a month of the ban on registration of new diesel vehicles above 2,000 cc starting January 1 has put a large number of models out of customers' list.

twitter-logo Chanchal Pal Chauhan        Last Updated: December 16, 2015  | 19:58 IST

Senior assistant editor Chanchal Pal Chauhan
The Indian auto industry is perplexed over a series of developments on the massive environmental concerns in Delhi along with the consumers who too have no clarity on which vehicle to buy amid a blanket ban on the registration of new diesel cars.

The recent Supreme Court order aimed at lowering air pollution levels in the national capital within a month of the ban on registration of new diesel vehicles above 2,000 cc starting January 1 has put a large number of models out of customers' list. These are not just the expensive Beamers or the Audi, even the regular Mahindras and Toyotas are now out of the shopping list.

The decision following the complete ban on sale and registration of diesel vehicles by the National Green Tribunal with active support of the Delhi government and various lobbies against diesel is expected to have long-term ramifications on the Indian automotive industry.

Auto manufacturers say that the restrictions on the industry would hamper the potential to take India on the global map of small car manufacturing. "There are no incentives to develop new technology, while the traditional fuels are bring curbed. There is a huge sense of uncertainty over the way our industry is moving and abrupt decisions are being taken," said a senior car company executive.

The new announcements have come even before the dust has settled on the Delhi government's decision to allow only odd and even registered cars on similar dates.

All this amid the reality of the Indian market, which perhaps is the only one in the world where multiple emission standards are followed.

The cars sold in around 50 major cities confirm to Bharat Stage IV emissions norms (equivalent to the European IV norms), while the rest of the country get BS III compliant cars, which is also the case for commercial vehicles.

Currently the country gets a supply of a mix of auto fuels to meet the technical needs of these different vehicles. Also, two wheelers like bikes and scooters confirm to a totally different emission standard, which are unique and different from all other vehicles, though they run on the different mix of fuel.

The debate of environmental degradation on account of rising vehicular pollution and other sources continues to rage with the automotive industry trying hard to find the answers.

"The industry works on long-time cycles. Therefore, changes that have a short term implication cause significant disruption. Since the changes are about the largest consuming market, the anxiety of the manufacturers is understandable. This situation will have an impact on balancing capacity, production, sourcing, procurements and the inventory management," says Kumar Kandaswami, senior director at Deloitte, a multinational consultancy.

Environmentalists say that the automotive industry is not the principal source of pollution in Delhi and other markets, and the recent measures are unleashing huge confusion in the absence of any long-term policy.

"Delhi's transport contributes about 25 per cent of pollution. More than 30 per cent of the winter air pollution is from burning waste. Banning diesel vehicles (which is great) will bring down Delhi's pollution by hardly 5 per cent, whereas if we are able control garbage and waste burning, and stop the age-old diesel gen-sets, then we may be able to reduce Delhi's air pollution by nearly 50 per cent," says Partha Bosu India head of Clean Air Asia, a Manila-based environmental body.

He added that the government must think beyond the odd-even formula and bring in at least 10,000 more buses to improve public transport and make it an effective alternative to autos and other means. "We should make private vehicle usage expensive by making parkings expensive and levying variable congestion charges," Bosu added.

Meanwhile, the landmark decision of the Supreme Court to bar entry of pre-Euro III trucks into Delhi and to double the environment compensation charge on all trucks entering Delhi along with all taxis in NCR to ply only on CNG would at least make the air more breathable.

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