How India’s auto industry is racing to meet 2020

Bharat Stage VI deadline

The leap to Bharat Stage VI (BS VI) emission standards is giving India’s auto industry sleepless nights
Maruti Suzuki’s car plant at Manesar, Haryana. Quality of fuel is one of the major concerns of carmakers ahead of the rollout Bharat VI
(BS VI) emission norms. Photo: Ramesh Pathania/Mint

Shally Seth Mohile

Mumbai: The year 2020 will mark an important chapter in India’s 67-year-old auto industry. That’s when
automakers will take a giant leap forward and switch to far stricter emission standards that are on par with those in
the US, Japan and the European Union.

R.C. Bhargava, chairman of India’s largest car maker, Maruti Suzuki India Ltd, sees the shift as “natural evolution”
for an industry that has come a long way since the pre-Liberalization era.

The move is aimed at curbing emission in a country that has the dubious distinction of being home to half of the 20
most polluted cities in the world, according to World Health Organization (WTO) report released in June 2016. For
Indian automakers such as Mahindra and Mahindra Ltd and Tata Motors Ltd, the efforts and capabilities required to
leapfrog to Bharat Stage VI—the Indian equivalent of Euro VI, is akin to climbing the Mount Everest. It’s set to
change the very DNA of auto companies, making them accountable for each unit of particulate matter and emission
exhaled by automobiles. For car buyers, it would mean driving cleaner vehicles with advanced technology, albeit at a
higher price.

What is Bharat Stage?

These are auto emission norms based on the European emission standards adopted in 2000. Each stage places a
certain limit on pollutants released, which is controlled by the type of fuel produced by oil companies and the up-
gradations and modifications made by automakers in vehicles to control pollutants such as NOx (Nitrogen Oxide)
and particulate matter (PM). India has been adopting and enforcing the emission standards in a phased manner. BS
III norms, for instance, were enforced across the country in October 2010 after they were first implemented in 13
major cities in April 2010. India now follows BS IV norms which came into effect in the entire country from April this
year.

Why is BS VI inevitable?

The implementation of advanced norms is a critical step as India, the world’s third largest emitter after China and
the US, is a signatory to Conference of Parties (CoP) protocol on combating climate change. As part of the agreement,
by 2030 India has to reduce its carbon footprint by 33-35% from the 2005 levels.
Click here for enlarge

BS VI norms will address one of the inherent flaws in the European emission standards which permits diesel cars to
emit more particulate matter and nitrogen oxide, said Anumita Roy Chowdhury, executive director at the Center for
Science and Environment (CSE), a New Delhi-based think tank.

In diesel cars, the jump to BS VI norms will result in reduction of nitrogen oxide emission by 68% and particulate
matter, which has a damaging effect on air quality and human health, by 82%. Similarly, in heavy-duty vehicles like
trucks, the shift to BS VI norms would result in reduction of nitrogen oxide emissions by 87% and particulate matter
by 67%.

India bit the bullet on advancing emission norms last January—an idea that was first mooted in 2015 before the
country signed the Paris Climate Change deal. Subsequently, on 6 January 2016, an inter-ministerial group meeting
chaired by Union minister for road transport and highways Nitin Gadkari and attended by heavy industries minister
Anant Geete, environment minister Prakash Javadekar (now education minister) and oil minister Dharmendra
Pradhan, announced that not only would India skip the intermediary step but also advance adoption by three years
to 2020 from 2023. By skipping one stage India will catch up with European emission standards which are currently
ahead by five years.

Even as environmentalists welcomed the decision, it set alarm bells ringing in boardrooms at auto companies and
sent their product engineering teams into a huddle. Auto firms, parts makers and oil refiners are estimated to spend
between Rs70,000 crore and Rs90,000 crore to comply with BS VI standards.

Given the high volumes and their presence in myriad segments of the automobile market, the leap to stage VI is
giving executives at home-grown auto firms like Tata Motors and Mahindra and Mahindra sleepless nights. Unlike
the local arms of the global automakers that have parent companies to fall back on, Indian companies will have to
develop solutions ground up with the help of global firms specializing in emission control technologies.

The implementation of advanced norms is a critical step as India, the

world’s third largest emitter after China and the US, is a signatory to
Conference of Parties protocol on combating climate change
“It’s a massive work. This change took Europe nine years, we have to do it in three years,” said Timothy Leverton,
chief technology officer at Tata Motors Ltd.

Rajan Wadhera, president automotive sector at Mahindra and Mahindra Ltd, echoed similar sentiments. “In my last
50 years, I have not seen this kind of challenge. It’s far more difficult than most of the technical transformation that I
have seen in my career,” he said. But, he added, Mahindra is bracing for the challenge to ensure all its vehicles are
compliant.

For Shekar Viswanathan, vice chairman, Toyota Kirloskar Motor Pvt. Ltd, upgrading to new emission standards is
not a challenge. All the company needs to do is to recalibrate its Euro VI models already selling in other markets, as
per the Indian driving cycle. “I think it’s a bigger challenge for companies that have a bigger footprint in India.”

Car market leader Maruti Suzuki India Ltd has around half a dozen passenger vehicle platforms, 16 models and
around 150 variants. C.V. Raman, executive director, engineering, at Maruti Suzuki India, declined to comment for
the story.

An email sent to Volkswagen Passenger Cars India Pvt. Ltd remained unanswered.
In an email response, a spokesperson at Hyundai Motor India Ltd said Hyundai as a global company has the
technology available and is continuously introducing the same in India and meeting all the requirements. The
automaker is geared up towards leading the introduction of BS VI, he said.

Paradigm shift in technology

CSE’s Roychowdhury said the transition to BS VI will bring a “paradigm shift in vehicle technology, particularly, for
diesel vehicles,” as it will fundamentally alter the way emission is monitored even as it marks several firsts for the
industry.

Here is how: It will require manufacturers, for the first time in India, to maintain service check data even for in-use
vehicles and the way they are performing in actual road conditions. Today, the only mechanism we have to check
emission from in-use on-road vehicles is a PUC (pollution under check) certificate, which Roychowdhury alludes to
as “sham,” owing to its inability to check pollution effectively.

Also, for the first time, India will introduce real driving emission (RDE) standards that will be gauged through an on-
board monitoring while the vehicle is being driven. It will monitor real-world emission from the vehicle and ensure
that the sophisticated emission control systems fitted in the BS VI vehicles work at optimum efficiency through the
life of the vehicle. With innumerable cases of in-road Euro-VI compliant vehicles emitting more than the permissible
limit globally, RDE standards will be very helpful in monitoring emission effectively.
Click here for enlarge

In September 2015, US regulator Environmental Protection Agency (EPA) found that many Volkswagen cars being
sold in America had a “defeat device” —or software—in diesel engines that could detect when they were being tested
and could change performance to improve results. This allowed the engines to emit nitrogen oxide pollutants up to
40 times above what is permitted in the US. Volkswagen admitted it was guilty of manipulating test results and
recalled from all across the world 11 million diesel cars fitted with software which helped in the manipulation.

The RDE in India is being derived from the European emission regulations, said Rashmi Urdhwareshe, director at
the Pune-based Automotive Research Association of India, the automotive R&D, testing and certification agency.
However, the RDE cycle in India is completely different.

“It’s still under discussion in what ways is it different,” she said, adding that data collection for it is underway.

With the help of the data, the government and the test agencies will be able to firm up an agreeable test cycle for RDE
in India. The exercise is expected to be completed in a year’s time. Automakers will develop and calibrate the BS VI
vehicles for RDE accordingly.

The emission standards will also mark a shift in the manner in which PM is regulated. Presently, it’s regulated based
on mass of PM that comes out per kilometer of distance travelled. To regulate the very fine particles that come out of
a vehicle, which are extremely harmful, India will switch to number standards for PM—regulating the number of
units coming out.

Fuel concerns
Oil marketing companies (OMCs) have an equally important role to play in the big shift as they need to ensure the
availability of the requisite grade of fuel well ahead of the deadline. Early introduction of technology would require
support from the oil companies for the BS VI fuel availability not only in a select few cities, but across the country,
said Maruti’s Bhargava. “Unlike BS III and BS IV that can make do with the inferior grade of fuel, BS VI vehicles
simply cannot run on such fuel.”

Officials at OMCs said they are geared up for this.

A director of refineries at one of the oil marketing companies, who declined to be identified, said oil refinery firms
including Reliance Industries, Bharat Oman Refineries Ltd (a joint venture company of Bharat Petroleum Corp. Ltd
and Oman Oil SAOC, Sultanate of Oman) will be BS VI compliant. “Some of the other refiners will also be partially
BS VI compliant and will be able to give quantities for testing in special batches,” he said.

In my last 50 years, I have not seen this kind of challenge. It’s far
more difficult than most of the technical transformation that I have
seen in my career- Rajan Wadhera, president automotive sector at Mahindra and Mahindra
Automakers are also seeking clarity from the government on whether the 1 April 2020 deadline, is applicable only for
manufacturing or both manufacturing and registration of BS VI vehicles.

If it’s the latter, to ensure vehicles are available for registration from 1 April, auto companies will have to start
manufacturing BS VI vehicles from the beginning of 2019, said Vishnu Mathur, director general at Society of Indian
Automobile Manufacturers (Siam). “There has to be enough clarity on the date of manufacturing and registration,”
said Mathur.
Also, if the deadline is applicable for both, oil companies will have to also ensure fuel availability well in advance. The
stock has to be ready before 1 April. “If it becomes registration, we have accepted a highly ambiguous target,” Mathur
added.

Toyota’s Viswanathan agreed: “At the end of the day, we don’t want a relaxation. We want it only when it’s suddenly
sprung on us.” If the timelines are well defined, adhered to not only by the auto firms but OMCs also, the transition
will be smooth, he said.

The emission leap is an opportunity for Indian companies and those like Maruti with high volumes, to create an
ecosystem for advance emission technology, said Rajeev Pratap Singh, auto sector head at Deloitte Consulting. “With
automakers already exporting Euro VI vehicles to so many countries, technical know-how is not a challenge.”

It’s just that they will now have to develop the requisite technologies and capabilities locally as against importing
them as the scale is much bigger now, said Singh. India’s car market is expected to reach 4.8 million by 2020, he
said.

Last Published: Wed, Aug 02 2017. 09 47 PM IST

BS VI: Challenges and opportunities for India’s auto
industry
With three years to go before Bharat Stage VI (BS VI) emission norms kick in, auto makers are struggling to test,
validate new systems across product lines, but components firms see a chance to move up the value chain
A file photo of a Mahindra and Mahindra plant. The company has 10 vehicle platforms across several product categories. The average cost of
calibrating and developing each of these platforms for BS VI could be anywhere between Rs75-100 crore, the firm says. Photo:

Shally Seth Mohile

Mumbai: It’s akin to expecting someone to climb Mount Everest in a month, Rajan Wadhera says of having to
leapfrog to the much stricter Bharat Stage VI (BS VI) emission norms from BS IV in less than three years.

The task at hand for Wadhera, president, automotive sector at Mahindra and Mahindra Ltd, involves upgrading and
overhauling the entire manufacturing ecosystem to ensure it can handle several thousand tests, calibration and
validation and also fits in well with the technology choices, while keeping a tight leash on costs.

That will make it one of the most mammoth research and development projects undertaken by the automotive
industry in India, says Timothy Leverton, chief technology officer at Tata Motors Ltd.

The transition will involve overhauling the working dynamics of the automakers and will alter the cost structure
forever, Leverton says.

So what differentiates the BS VI standard from BS IV? It’s the introduction of advanced technologies to ensure
pollutants emitted by the vehicles are reduced and comply with the specified limits. It will also mean a number of
changes to be made in the engine systems.

The implementation of the advanced emission norms might still be three years away, but Wadhera and Leverton are
already racing against time to execute the most complex project of their careers.
The task is more onerous for companies that have products spanning several categories, ranging from cars and SUVs
to two-wheelers and trucks. Such a portfolio means that the companies would have to invest more resources and time
to build the requisite capabilities for successfully executing the programme.

The transition will involve overhauling the working dynamics of the

automakers and will alter the cost structure forever- Timothy Leverton, chief technology
officer at Tata Motors

Tata Motors, for instance, uses 34 different engines and has 150 vehicle programmes that will be fitted with those
engines. “We have such a huge range to work on—from Magic Iris to 49-tonne trucks,” says Leverton. “Europe took
nine years to go to the effective equivalent of BS VI, we have to do it in three. It’s a huge programme.”

Mahindra’s Wadhera echoes similar sentiments. “In my last 50 years, I have not seen this kind of challenge. It’s far
more difficult than most of the technical transformations that I have seen so far.”

To understand the challenges Wadhera and Leverton face, it is worth diving into the underlying emission
technologies. To achieve a reduction in particulate matter by 82% and oxides of nitrogen (NOx) by 68%, auto makers
need a combination of technologies—one is the diesel particulate filter (DPF), a device designed to remove diesel
particulate matter, or soot, from the exhaust gas of a diesel engine. Then there’s selective catalytic reduction (SCR)
and exhaust gas re-circulation (EGR), which is for NOx reduction. SCR is a process that uses a catalyst to convert
NOx in exhaust gases to nitrogen and water, which are then released into the air. In EGR, the engine re-circulates a
portion of the exhaust gas back to the engine cylinders depriving it of certain amount of oxygen thereby leading to
lower temperature burn. This reduces NOx emissions, but produces more PM, which is reduced using diesel
oxidation catalyst (DOC) and particulate filter.
Auto parts shake-up

The transition is also an inflection point for auto component makers—both Indian and multinationals. By acquiring
technologies and capabilities through joint ventures, home-grown companies see this as a chance to move up the
value chain. For multinationals such as Germany’s Bosch AG and America’s Cummins Inc., it’s an opportunity to
develop a solution for a market that is unique, and create an economy of scale for low-cost emission control systems
and technologies that can be used in other emerging markets.

“The shift to BS VI is set to shake up the auto component industry,” says Raghuttama Rao, a former managing
director at Icra Management Consulting Services Ltd. According to Rao, only those that have the requisite technology
will be able to pass muster. He expects dominance of global auto component makers to increase, either directly or
indirectly.

The local arm of the Germany’s Bosch AG is developing a lean

electronic fuel injection system (LEFIS) for three-wheelers that will
help them meet the BS VI norms
Jan O. Röhrl, chief technology officer and head of mobility solutions business for India at Bosch Ltd says: “It’s a huge
step as compared to a BS IV since the capacity requirement for a BS VI is increased by a factor of 4 to 5.”

The shift, he adds, is an opportunity for the automaker and Bosch as a supplier, pointing out that the company will
draw from its previous learnings as it has supplied the same globally and can do the same even in India. Owing to its
long presence in the country, it already has modern testing facilities. Additionally, in May, Bosch broke ground for
the second phase of its Bidadi plant near Bengaluru with an investment of around Rs500-600 crore. The unit will
manufacture parts for BS VI compliant vehicles as well.
The local arm of the German component maker is developing a lean electronic fuel injection system (LEFIS) for
three-wheelers that will help them meet the BS VI norms.

“We knew that in a cost-sensitive market like India, customers would face the difficulty of being able to afford a fuel
injection system that was relevant to European conditions,” he says. The challenge, therefore, was to design a system
for India that would not just meet the stringent particulate matter (PM) and NOx emissions of BS VI but also be cost-
effective and robust to survive “the harsh use-case here”, he says.

A combination of mechanical pump and electronically controlled smart fuel injectors, LEFIS is estimated to go into
series testing phase by mid-2019 and enter 2020 fully prepared to meet the BS VI emission regulation, he says.

Sandeep Sinha, chief operating officer at Cummins India Ltd, says the real challenge is not engines or engine
technology as that’s already available, but system integration and optimizing them as per Indian driving cycle and the
time required for calibration and validation. Cummins is one of the largest engine makers in the country.

The cost of developing an engine platform averages from Rs150 crore to Rs200 crore, according to Sinha. Cummins
is investing Rs1,000 crore in setting up the world’s biggest research and development centre in Pune. The centre,
which will start operations from the third quarter of fiscal 2017, will also have test cells for BS VI engines and will
help the firm localize a lot of critical parts that are currently imported.

BS VI is a challenge as well as an opportunity for the industry as none of the Euro 6 markets have bikes with small
engines, according to Deepak Jain, managing director of Lumax Auto Industries, a Gurgaon-based company that
supplies lighting systems for vehicles. Manufacturers in India would have to develop a cost-effective solution from
the ground up.
To be sure, it’s not the technical capability which is worrying auto firms as quite a few of them have been exporting
Euro 6 vehicles to several markets. “The technology isn’t extremely difficult, but you can’t simply take what is
available in Europe and transplant it in India as our driving cycle is very different,” says Vinod Dasari, managing
director of Ashok Leyland Ltd. “We will have to apply Indian innovation and this will require investment and time.”

Driving cycle refers to the speed of a vehicle versus time.

The real challenge is not engines or engine technology as that’s

already available, but system integration and optimizing them as per
Indian driving cycle and the time required for calibration and
validation- Sandeep Sinha, chief operating officer at Cummins India
Sandeep Sinha, chief operating officer at Cummins India

It’s the challenge of executing the project of such a huge scale which is giving sleepless nights to companies. As the
intermediary BS V stage has been skipped, there’s a time crunch and firms would have to develop and optimize the
DPF and SCR systems in parallel, instead of doing it sequentially.

“I know how to do it. But I need to know how to do it better than others,” says Dasari.

Mahindra’s Wadhera agrees. “It’s not about the technology per se as I have it, my challenge is to multiply it over
various platforms in that order, go through the grind with perfection. In the process of doing that, I don’t have to
compromise on fuel efficiency,” he says. Mahindra’s large portfolio of models explains Wadhera’s worries. The
company has 10 vehicle platforms across several product categories including cars, SUVs, trucks and pick-ups. For
each, it would need at least 20 people and three years’ time to develop a good DPF with good test facility. It needs
5,000 hours on the test bed and at least 700 tests on the chassis dynamometer, a device for measurement and testing
developed to simulate the road on a roller in a controlled environment, mainly inside the building. The vehicle is
fixed to a building with a restraint device.

To test these technologies for best results, their performance needs to be monitored in every season and across
various terrains, says Wadhera. “You are trying to evolve a methodology for calibration. To ensure the technology
developed is foolproof, you need a minimum of two cycles—two years, two seasons,” he explains, adding that any
laxity in testing and validating the functioning of the device can be a major safety hazard.

The second technology is SCR, which too has a development cycle of three years. It will take close to 4,000 hours of
test-bed running. It will need chassis dynamometer and will necessitate development of several new parts and
around 20 to 25 new vehicle systems.

There is also the challenge of packaging them all efficiently in the limited space without compromising on fuel
efficiency. The addition of parts and aggregates such as the DPF , a urea tank, dozing unit for NOx (required in SCR)
will increase the weight of the vehicle by at least 40-50kg. The additional weight can impact the fuel efficiency.

Economies of scale

To be able to develop both DPF and SCR technology simultaneously, across 10 vehicle platforms, Mahindra will need
400 skilled people—20 people per platform. “Manpower needs to be skilled, who will teach them? It’s a new
technology. We are struggling, it’s a mammoth challenge,” says Wadhera. Unlike BS IV and BS V where one can
manage with either one of the technologies—EGR or SCR, BS VI needs both. Therefore, the complexity increases
manifold, says Leverton. The sheer content means that the number of engineers and test facilities one needs, will
have to be accelerated. One of the biggest areas of engineering activity for example, is in the areas of electronic
control calibration—“you make the basic system and you have to adapt it to an application of a vehicle”, he says,
pointing out that Tata Motors needs three times the number of calibration engineers it currently has.

In the run-up to the BS VI implementation in April 2020, Ashok

Leyland is likely to spend anywhere between Rs200 crore to Rs400
crore- Vinod Dasari, managing director of Ashok Leyland
Vinod Dasari, managing director of Ashok Leyland

The average cost of calibrating and developing each of the ten BS VI platforms could be anywhere between Rs75
crore to Rs100 crore, depending on the extent to which a company seeks external help and engages firms such as
FAB, Ricardo and AVL that specialize in emission technology, says Wadhera.

In the run-up to the BS VI implementation in April 2020, Ashok Leyland is likely to spend anywhere between Rs200
crore to Rs400 crore, says Dasari. This is inclusive of infrastructure and people costs, among other things. Ashok
Leyland will need to hire around 100 engineers, he says.

It’s critical to do it all at a competitive cost so that Indian companies can compete with big multinationals, who have
it all—technical capability, experience, and deep pockets. “We would be much rather on the lower side. With lower
costs, we’ll have a much better pricing power,” says Wadhera, pointing out that the economies of scale Indian
companies have will put them in good stead vis-à-vis foreign rivals.