Shift to green fuels or be ‘bulldozed’, automakers told
NEW DELHI: Indian automakers were warned by the government on Thursday to switch to production of vehicles that run on nonpolluting alternative fuels or risk being overtaken by inevitable policy change.
Automakers have to move to vehicles that run on electricity, biodiesel, ethanol and compressed natural gas “whether they like it or not ”, transport minister Nitin Gadkari said .“And I am not going to ask you. I will bulldoze it (through),” Gadkari told auto industry executives at an annual convention organised by the Society of Indian Automobile Manufacturers( Si am ).“The government has a crystal-clear policy to reduce imports (of crude) and curb pollution.”
Gadkari’s speech served notice on automakers that the future of the industry lies in environment-friendly alternatives to petrol and diesel, which will require a radical shift in the strategies of vehicle manufacturers as well as significant technology investments.
“We are going togo after diesel vehicles heavily. So don’t complain later and say you have unsold inventory if they are banned,” Gadkari warned.
India’s automobile industry, which sold 3.04 million passenger vehicles in the year to March 2017, has been hit hard by policy changes and court decisions pertaining to emission norms in response to the worsening air quality in Indian cities. It faced an eight-month ban in 2015-16 on large diesel vehicles in the National Capital Region centred on Delhi and was ordered to stop sales of its inventory of Bharat Stage-III (BS-III) vehicles after BS-IV norms took effect in April.
In January, the government decided that India will move up to the toughest emission standards of BS-VI from BS-IV by 2020, two years early and skip ping an intermediate level, a decision that will make cars, SUVs, trucks and buses more expensive.
Auto firms, parts makers, and oil refiners will end up spending anywhere between ₹70,000 crore and ₹90,000 crore on the change, Mint reported on January 6.
Last week, an ordinance was promulgated to enable a rise in the goods and services tax (GST) cess on motor vehicles, including medium-sized cars, large cars and SUVs, from 15% to 25%.
“The auto industry is about large investments and long lead timesforproduct development,” said Rakesh Batra, partner and leader, advisory services, for the automobile industry and transportation sector at consulting firm EY. “To be able to invest in future, disruptive technologies, the industry should be able to sustain itself. By making too many policy changes, the earlier investment gets redundant and there’ s no way you can recover it.”
Unlike some other sectors such as aviation, oil and gas, telecom and power, India’ s auto sector does not have a dedicated ministry for formulation of policies and regulations.
Vinod Dasari, the outgoing president of Siam and MD of Ashok Leyla nd Ltd, said the auto industry is “not asking for any sops and incentives, we are just asking for a policy roadmap”.
“One of the things that industry has been saying is that things are changing too quickly. Any sudden change has an impact,” said Pa wan Go enka,MD,M ah indra& Mahindra Ltd.