Car salesman, India

View from India: New fuel efficiency rules help in drive towards greener transport

Image credit: Dreamstime/Iurii Krasilnov

Come April 2023, all vehicle manufacturers and importers will need to comply with fuel consumption standards (FCS). The government mandate applies to light, medium and heavy-duty motor vehicles of various categories.

The Ministry of Road Transport and Highways (MoRTH) has issued an official statement to the media that prior to this notification, compliance with annual fuel consumption standard was applicable to vehicles of M1 category (motor vehicle used for carriage of passengers, comprising not more than eight seats, in addition to the driver's seat) with gross vehicle weight (GVW) up to 3.5 tonnes. With the amendment, the intent is to expand the ambit of vehicles for compliance with FCS, and therefore introduce more fuel-efficient vehicles.

In one move towards green transport, the Bharat Stage (BS) VI standards on emissions have have applied to new motor vehicles since 2020. This could take care of vehicular toxic emissions. And now, fuel efficiency is another dimension that could be addressed. Ah that leads us to important aspects such as the reduction of fuel consumption by making it more efficient. Fuel efficiency is essential in order to lower the maintenance cost of the vehicle. Hybrid technologies could be a means of improving fuel efficiency. Modifications in the auto design could help; especially by reducing the aerodynamic drag for better fuel efficiency.

Cleaner fuels may lead to better auto performance. Besides that, if the tailpipe emission is reduced it can also lower airborne pollutants. From the beginning, motor vehicles have been fitted with internal combustion engines (ICE). These have stayed dominant because ICEs and fossil fuels were easily available. However, over time, the extent of environmental damage caused by fossil fuels has created a market for electric vehicles (EVs).

As per a recent CRISIL press release, the revenue of EV components’ market in India is likely to rev up at a compound annual growth rate (CAGR) of 76 per cent to 72,500 crore rupees (£7.7bn) in fiscal 2027 from 4,300 crore rupees last fiscal (£450m). That will take the share of EVs in the overall automotive components market to 9-11 per cent – up from a negligible 1 per cent currently – even as the supply of parts for ICE-driven vehicles also rises.

“Improving cost viability of EVs versus ICE vehicles, and rising consumer demand for environmentally cleaner mobility will drive the transition to EVs,” said Pushan Sharma, director, CRISIL Research. “Among the key auto segments, two-wheelers and passenger vehicles (PVs) are seen driving the transition, with their penetration rising to 19 per cent from the current 2.5 per cent and 7 per cent from less than the current 1 per cent, respectively, over the next five fiscals. Commercial vehicles, the other large auto segment, are expected to see far lower penetration at 3 per cent (0.3 per cent currently) because of unfavourable economics.”

All said, given the pace of transition to EVs, individual companies could gain or lose disproportionately depending on their product portfolio, customer mix, ability to reengineer, and balance sheet strength. These would be the monitorables in the road ahead. “Companies are already investing in developing electric components, both with established ICE original equipment manufacturers (OEMs) and with new-age, pure play EV makers,” added Naveen Vaidyanathan, director, CRISIL Ratings.  

India is the world’s fourth largest vehicle market. Given the proliferation of vehicles, it’s all the more pertinent for automakers to explore solutions to maximise fuel efficiency and pack in carbon savings.

All this could probably be backed by good road infrastructure, along with clear walkways. When we look at road safety, what comes to mind is the recent announcement made by Nitin Gadkari, Union Minister of the Ministry of Road Transport and Highways. Carmakers will have to provide a minimum of six airbags in motor vehicles that can carry up to eight passengers. This is a move towards enhanced safety of the passengers, as airbags provide extra cushioning around the neck, head and spine.

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