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How can the auto-component industry survive the new emission norms challenge?

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Climate change and environmental issues are an active concern for businesses and nations the world over. India, with 10 of the most densely populated metros in the world, has experienced this first hand, especially when it comes to air pollution. So it was a heartening moment when in January 2016 the Union Government decided to accelerate India’s automotive emissions standards. The result – the Indian automotive industry quickly began gearing up for a major technology transformation.

BS-IV to BS-VI: challenges in technology

The change from BS-IV to BS-VI in India’s vehicle emissions standards is an ambitious venture that has far reaching consequences for the automotive components industry at large. By leapfrogging from BS-IV to BS-VI standards, India aims to be at par with European nations in terms of emissions standards. In real terms this means that from 2020 onwards Indian automotive companies will need to develop and incorporate a number of new technologies to their product line to reduce NOx emissions by 25% in petrol engine vehicles and by 68% in diesel engine vehicles.

Among the many technological upgrades needed will be the incorporation of on-board diagnostics (OBD) systems which are mandatory under the new policy. OBD systems will conduct real-time monitoring of vehicle generated pollution in order to ensure that emission control components operate at optimum efficiency and are able to detect malfunctions quickly for immediate fixing.

The emission control components that the OBD will monitor are the key upgrades that will improve the engine and exhaust systems, bringing them up to BS-VI standards. The two critical engine fitments typically required under these norms will be the Diesel Particulate Filter (DPF) and the Selective Catalytic Reduction (SCR) module. The DPF system is necessary to reduce particulate matter (PM) emissions in diesel vehicles, while the SCR module is required to reduce NOx emissions.

This upgrade will directly impact the supply chain and production costs. It is expected that this will increase the end price of petrol cars to the tune of INR 20,000-30,000 and that of diesel cars by as much as INR 75,000-1,00,000. This rise in overall production costs will have an inevitable impact on original equipment manufacturers (OEMs) that have a large market share in diesel cars, as well as auto suppliers that have a strong dependence on diesel car OEMs.

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