BS6 Norms and Their Impact on the Two-Wheeler Industry

India is home to some of the most polluted cities in the world. As per the data published by the World Health Organisation in 2016, excessive air pollution is the fifth largest reason for deaths in India. In fact, among the top 100 most polluted global cities (in terms of Particulate Matter PM10), 30 cities are from India.

One of the primary reasons behind India's imprudent air pollution is the harmful emissions from millions of vehicles plying daily on roads. In Delhi alone, vehicular emissions contribute to 59%, 50%, and 18% of the harmful carbon monoxide, hydrocarbons, and nitrous oxides discharge into the air.

To curb the perennially rising air pollution in India, the Central Government laid down stricter BS6 emission norms for vehicles in 2017. Further, the Government made it mandatory for all cars and two-wheeler manufacturers to sell and register only BS6 compliant vehicles from 1st April 2020.

In case you're wondering how the Indian two-wheeler industry has been impacted due to this BS6 norm, this article is for you. Here, you will know everything about the implementation of BS6 emission standard in India and how it will impact the pricing, hardware, fuel, lubricant technology, and manufacturing of the new bikes and scooters. Read on.

What is BS6 emission standard?

BS6, or Bharat Stage 6, is the most advanced emission standard for automobiles in India. It is equivalent to Euro VI norms, which is currently in place in various European countries. Considering the constantly rising air pollution in our country, the Indian Government decided to leapfrog directly from BS-4 to BS-6 emission standards to control vehicular pollution.

Accordingly, the entire automobile industry was asked to phase out all their BS-4 vehicles and sell only BS-6 cars and two-wheelers after the deadline of 1st April 2020.

How has two-wheeler manufacturing changed due to the implementation of BS6 norms?

Transitioning from BS4 to BS6 norms requires significant changes in engine technology for two-wheeler manufacturers in India. These changes include improvements in engine combustion and calibration, enhanced fuel injection and cylinder pressures, and after-treatment solutions for NOx and PM.

The BS-6 norms make it mandatory for two-wheeler manufacturers to introduce a fuel injection system for the first time in India. As an aftereffect of this system, carbon emission from the petrol engines of two-wheelers has reduced significantly. Also, the BS6 engines are observed to be less powerful but more fuel-efficient.

How has the implementation of BS6 norms affected the on-road pricing of two-wheelers?

The implementation of BS6 emission standards has forced automobile manufacturers to adopt significant engine manufacturing technology changes. Precisely, they will now have to let go of affordable carburettors and instead use more expensive fuel injection systems for their products. As a result, the on-road prices of BS6 bikes and scooters have gone up by at least 10 to 15%.

The two-wheelers in the affordable segment are the most affected due to this change, whereas bikes that already have fuel injection systems are the least affected.

How are the two-wheeler manufacturers impacted by this move?

To meet the mandatory requirements and make their vehicles BS6-compliant, two-wheeler manufacturers in India had to increase their business investments. Many cars and two-wheeler manufacturers also suffered significant losses due to their unsold inventory of BS4 vehicles after the deadline of 31st March, 2020.

As a result, many automobile manufacturers in India, including both two-wheeler and four-wheeler makers, pulled their capacity expansion plans. Also, as the demand for two-wheelers is expected to fall a bit in the upcoming days, the two-wheeler manufacturers in India have shied away from launching new products during the last year.

However, looking at the encouraging sales figures after lifting lockdown restrictions in many parts of the country, the two-wheeler makers can expect a profitable year ahead.

What is the effect on demand for new two-wheelers?

According to the ICRA analysis, the demand for two-wheelers decreased significantly after the mandatory implementation of BS6 norms. Apart from the 10 to 15% increase in on-road prices of vehicles, numerous other reasons are behind this decline in demand. These include - a) the slowdown, which had already impacted the industry and b) the general tendency of buyers to wait a bit whenever some new norms come into effect.

Besides the factors mentioned above, a sharp hike in two-wheeler insurance premiums and the implementation of new safety norms, as far as a braking system for two-wheelers, have also increased the ownership cost of two-wheelers, leading to a decline in sales.

Precisely, the entry-level motorcycles (75-100 cc) and scooters, which have been a key growth driver for the industry, have also witnessed a dip in demand after the price hike due to the BS6 implementation.

What lies ahead?

As per the experts, India's two-wheeler industry is estimated to contract by 8 to 10% in the upcoming year. However, the revitalised sales figures after the pandemic have brought fresh hope for the industry. Having said that, the two-wheeler manufacturers are looking to play for the future and have started to invest more in the development of new-age electric vehicles.

The upcoming days could see many new launches of electric bikes and scooters, which are touted to be the future of India's automobile industry. Furthermore, the implementation of stricter emission norms and increased fuel prices could see an upsurge in demand for electric cars and two-wheelers in the upcoming years. Also, don't forget to buy a suitable bike insurance policy for your vehicle.