India ranks among the most polluted nations and is home to a majority of the top polluted cities in the world. According to a recent report, deaths from air pollution are the highest in India. Harmful emissions from vehicles running on the roads in the country contribute to this pollution to a great extent.
The deteriorating air quality in India has plenty of long-term health ramifications for regular commuters. Beyond the health impacts, the impact of climate change across the world remains just as disconcerting. It is critical to address this issue immediately, with both individual responsibility and collective action.
To curb the dangerously high levels of toxins in the air, the Indian Government introduced stricter emission norms for all vehicles. In this post, let us learn more about the BS6 emission standards, what they include, how they are being enforced, and their impact on the country's two-wheeler industry.
What is the BS6 Emission Standard?
BS6, referred to as Bharat Stage 6, is equivalent to EURO 6 norms applied in European countries. It is an advanced emission standard in India that has been made compulsory in response to the constantly rising pollution in the country.
The Central Pollution Board has introduced these norms under the regulation of the Ministry of Environment and Climate Change. The BS6 standard was brought directly after BS4, resulting in all the BS4 vehicles being phased out of the industry from April 1, 2020.
Changes in Two-wheeler Manufacturing after the BS6 Norms Implementation
The abrupt shift from BS4 to BS6 is likely to cause substantial technical difficulties for two-wheeler manufacturers. It requires significant changes in the engine technology, along with improved calibration, cylinder pressure, fuel injection, and combustion metrics, all of which are likely to require plenty of effort in redesigning and implementing.
For the first time in the Indian markets, leading two-wheeler brands have introduced fuel injection systems for all their vehicles. Cheap carburettors are out, and work remains in full swing in pursuit of more fuel-efficient and less powerful engines that can cut carbon emissions by order of magnitude.
While the abrupt shift resulted in a lot of confusion among leading players in the sector, it was inevitable considering the gravity of India's pollution crisis. This demanded drastic action, and while the results are not immediately visible, they will likely reduce pollution levels in the long run.
Impact of BS6 Norms on the Pricing in the Two-wheeler Industry
The proportion of changes that were required of leading two-wheeler brands has resulted in an average increase in on-road prices of bikes by 10% to 15%. Manufacturers have yet to efficiently source or set up production for compliant injection systems and higher-quality carburettors.
Products in the affordable or low-margin segment have been the most affected, with the increased cost of these newer parts making them no longer viable. It is likely to take a while longer before manufacturers in this segment can adjust to the changes.
When it comes to the two-wheeler industry, it isn't just the handful of companies and leading brands that bear the brunt but the 1,000s of suppliers and parts manufacturers who have had to reorganise and recalibrate their supply chains without much notice.
Impact of BS6 on Two-wheeler Manufacturers
To comply with the latest BS6 requirements, two-wheeler manufacturers must increase their investment in the business to facilitate the changes required in the vehicle engine technology. Many of these manufacturers also suffered huge losses as they could not clear out their stock of BS4 vehicles before the deadline of March 31, 2020.
The result was that companies had to pull out of their capacity expansion plan because the demand fell due to a price rise. They were not able to launch new products made according to the BS4 standard.
While there was a temporary blip in the sector and its ancillaries owing to the abrupt change, the industry remains on the recovery path, with demand increasing and new capacity expansions, product launches, and innovations all picking up pace in recent quarters.
Impact on Demand in the Two-wheeler Industry
The demand for two-wheeled vehicles had significantly fallen after implementing the BS6 norms. There was an increment in prices up to 10%-15%, which resulted in a drop in the sales graph of two-wheeler manufacturers.
However, this could have resulted from the increase in two wheeler insurance premiums over the past few years, along with a host of other additional norms regarding design and safety that were unveiled simultaneously.
This was mostly an unexpected blip, and things are already back to normal, with manufacturers realigning their supply chains to comply with the new requirements and taking measures to maintain competitive pricing and margins.
Final Thoughts
The introduction of BS6 emission norms is an effort to minimise harmful emissions and reduce pollution levels in the environment. The new standard has certainly impacted the sector's demand, prices, and business.
These companies are now starting to invest in new-generation electric vehicles. Stricter emission standards and rising fuel prices may increase demand for electric scooters and bikes in the coming years in India.
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