BS-VI emission norms for two-wheelers may increase costs: Icra

The proposed BS-VI emission norms for two-wheelers may increase the cost of these vehicles, rating agency Icra said today.
"The Indian two-wheeler industry, the largest in the world, which is transitioning to tighter emission norms in an attempt to be on par with global emission standards, would see a large scale adoption of alternate technologies leading to a cost differential to the tune of 10 per cent to 20 per cent of the cost of the vehicle," Icra said in a statement.
Currently, India follows BS-III emission norms for two-wheelers.
From April 2016, all new two-wheeler models started complying with BS-IV emission norms, and the existing models would comply with BS-IV emission norms from April 2017, on a pan-India basis.

As per a notification from the Ministry of Road Transport and Highways (MoRTH), all automobiles including two-wheelers would need to migrate to BS-VI emissions norms in 2020, bypassing BS-V norms.
The statement said BS-VI norms would mandate the use of electronic fuel injection (EFI) systems in two-wheelers to replace carburettors that would impact the cost structures for manufacturers.

"The cost impact of EFI systems on two-wheelers with existing levels of localisation is expected to be significant, in the region of 10 per cent to 20 per cent, for now. The costs however, are expected to come down subsequently as parts in the EFI system get localised," Icra's Senior Group Vice President Subrata Ray said.

It said though existing EFI equipped models in the market have a cost differential of around Rs 6-9,000 with their carburettor equipped counterparts, the same would come down as parts in the EFI system get localised, and the ancillaries pass on benefits of economies of scale to the OEMs.
"The ability of ancillaries to localise the entire EFI system by 2020 remains challenging. Hence, cost impact on the vehicle would likely remain on the higher end when BS-VI gets adopted in 2020. Subsequently, localisation and corresponding cost reductions would be carried out in a phase wise manner," Ray said.
The statement said the challenges to migrate to the new norms are availability of BS-VI compliant fuel, adapting the available technologies in line with operating conditions and requirements of the Indian market, cost differential on migration from carburettor to EFI system and vehicle modification cost.

"The cost impact is not expected to be significant, in the range of 2-3 per cent of the price of the vehicle", Ray said.