‘Adopting BS-VI norms will make diesel vehicles costlier’

PRICEY AFFAIR:The diesel segment is likely to see a sizeable cost rise due to introduction of additional components.— FILE PHOTO  

The government’s decision to leapfrog the Bharat Stage (BS)-V Emission Standards and implement the BS-VI norms by April 2020, four years ahead of the earlier schedule, will make diesel vehicles costlier by Rs.70,000 to Rs.1,50,000, according to a statement issued by ICRA Ratings.

The diesel segment is likely to witness a sizeable price increase due to introduction of additional components, the note said. This will make diesel passenger vehicles costlier (vis-à-vis petrol variants) and may deter demand for diesel vehicles, it added.

“The cost of petrol passenger vehicles may increase by 20,000-30,000 per vehicle, while the increase for diesel passenger vehicles could be in the range of Rs.75,000-100,000 per vehicle. For medium and heavy commercial vehicles, the cost differential is expected to be Rs.100,000-150,000 (or 10 per cent of current vehicle cost),” said Subrata Ray, Senior Group V-P, ICRA ratings.

As diesel vehicles would require significant technology changes, the cost differential between petrol and diesel passenger vehicles would expand further. “This will widen the payback period for diesel vehicles,” Mr. Ray said.

Price gap

The narrowing price gap between petrol and diesel, the recent ban on registration of diesel vehicles in the National Capital Region, along with the potential risk of restricting diesel-powered taxis could have significant implications for diesel investments by Original Equipment Manufacturers (OEMs), he said. ICRA Ratings said while availability of technology would not be an issue, the key challenge for OEMs would be adapting the available solutions to Indian market conditions in a short time-frame, in a cost-effective manner. Availability of BS-VI compliant fuel on nationwide basis by 2020 may be a challenge, it said.