2018-02-12
It’s all about e-mobility though other challenges remain

BS VI and rising oil prices are more important realities to be reckoned with

Electric could have been the underlying theme of the Auto Expo but there are bigger challenges in store for the industry.

For instance, Bharat Stage VI emission norms are due to be implemented in April 2020 and automakers are working round the clock to meet the deadline. After all, it is no small feat moving directly from BS IV in quick time when other countries across the world have taken years to do so.

Beyond this, the Centre’s focus on 100 per cent electric by 2030 clearly seems a tall order now and indications are that this could be pruned to 40 per cent instead. Even this is a tall order given that China, which is leading the e-mobility race worldwide, has set itself a smaller target.

Policy directions also don’t seem to reflect a logical move towards e-mobility. As per the GST, electric vehicles have a smaller levy of 12 per cent while this is over three times as much for hybrids. “Such a duty structure just won’t work and help the cause of clean air,” says a top auto industry executive.

The grim reality to reckon with is that this is a diverse landscape where convergence in e-mobility is almost impossible. For that matter, compressed natural gas is only available in Maharashtra, Delhi and parts of Gujarat when it is only logical to extend this to the rest of the country.

However, this is easier said than done considering that this would require oil companies to invest in pipelines which, in turn, will involve a host of obstacles in environment clearance and so on. Small wonder then that petrol and diesel continue to be the fuels of choice.

This is where the bigger worry looms large in terms of rising crude oil prices, which are already hovering around the $70/barrel mark. At the retail end, petrol and diesel prices have already reached worrying levels of over ₹75 and ₹65 per litre. This is an area of concern in the commercial vehicle industry where expensive diesel has the potential to stoke inflation.

Clearly, there are a host of energy related challenges to cope with in the coming years. This is true for many other countries too and this is where India needs to take a step-by-step approach in managing the transition. According to industry experts, there is really little point in striving for an all-electric ecosystem and instead wait for things to take their own course.

After all, the new BS VI era will usher in cleaner vehicle emissions be it from petrol or diesel. Manufacturers will then need to take a deep breath and then plan their next course of action. For now, there are greater worries on capacity creation and employment in the manufacturing sector. These will need to be addressed first.

Source- The Hindu Business Line