BS VI fuel in India: Leapfrog opportunity or another demonetisation?

Following our analysis of India’s electric vehicle (EV) preparedness, we now look into the controversy surrounding BS VI fuel and engines, which is one of the major woes of the auto industry today.

Volvo V90 Cross Country

1) BS VI for air quality

Following the Supreme Court ruling earlier this year, India will transition to Bharat Stage Six (BS VI) vehicular emission norms, which means all vehicle manufacturers will have to sell BS VI compliant vehicles while fuel suppliers will have to provide BS VI fuel only. This was initially seen as a huge win for pollution control but we will see below how it has turned into a logistical nightmare for the auto industry. But what exactly is BS VI fuel? Following European Union standards, India has leapfrogged from the current BS IV regime to BS VI, skipping BS V entirely in the interest of improving vehicular emissions. BS VI is highly refined and is likely to reduce major air pollutants such as sulphur and nitrogen oxide. With BS VI fuel now available across the highly-polluted NCR region, the upcoming winter months will indicate just how effective the BS VI move is.

2) Vehicle-fuel compatibility

There aint no free lunch or free pollution control! Everyone along the auto industry value chain will now have to shell out extra bucks to implement this technology. From vehicle manufacturers who have to invest into overhauling their production towards BS VI compliant vehicles to oil manufacturing companies (OMCs) who have to invest in fuel refining technology, this transition is going to cost a pretty penny. M&M alone estimates its BS VI shift to cost upwards of Rs 1000 crore. No doubt BS VI is going to make vehicle ownership rather expensive, if only marginally. This begs the questions: why can’t I use my current BS IV engine with BS VI fuel? The truth is that the new fuel affects old petrol engines only negligibly while old diesel engines will see some deterioration. Thus, the frenzy to manufacture and buy BS VI compliant vehicles only.

3) Fuel availability

Now consider the deadline of April 2020 set by the SC ruling, before which manufacturers have to clear current BS IV vehicle inventory as well as gear up towards new compliance. But why would I buy an old vehicle (even at lowest of low prices) when I know new fuel has been mandated across the country. In fact, OMCs have been lauded for already supplying BS VI fuel across the NCR much ahead of the scheduled deadline. But in the event that supply is delayed to any of the 60,000 fuel stations in the country, car owners will be lining up for hours outside stations, reminiscent of demonestisation when infrastructure failed to keep up with regulation. The recent bid to privatise leading OMC Bharat Petroleum may impact the cost at which BS VI is ultimately supplied.

4) Cheap car v/s clean air

Ultimately, the BS VI agenda is about emission control and the costs will finally be borne by car buyers for whom fuel will become dearer by Rs 2 per litre while the cost of petrol cars will increase by Rs 25,000 to Rs 50,000 while diesel car cost will rise by nearly one lakh. Many manufacturers, including Maruti Suzuki, have announced that they will stop manufacturing diesel cars owing to cost increase. Add to this the GST burden of 28% and it appears that vehicle ownership in India will become a luxury rather than a necessity. Considering the incentive push for emissions free electric vehicles, the new BS VI norms are a way to force clean tech onto the auto industry. So the most relevant question you need to ask as a car enthusiast or potential car buyer; how much do I really need a conventional internal combustion engine (ICE) vehicle (instead of say EVs) and how much am I willing to pay for my vehicle’s impact of the air quality?

Also read:- 

Is India ready for the Electric Wave?

An electric future for the Indian automobile industry is on its way!

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