Driven by the market

There is more to profit from alternative fuel technologies than meeting emission norms with conventional fuels. But is the industry listening?

 
Published: Saturday 04 July 2015

Any sign of slapping tighter emissions standards on vehicles triggers doomsday prayers as a price hostile market appears bleak in the face of higher costs surviving. Introducing cleaner technology comes at a price. With no established practice in the country to relate cost of production with health costs of polluting vehicles to adjust vehicle taxes, any move to phase in cleaner technology or standards is considered market unfriendly. This has been the cagey reaction of the old-fashioned market watchers and the industry alike, ever since public campaign and the judicial intervention in Delhi have pushed for tighter emissions standards.

More discerning market watchers, however, will agree that no automaker in the country can escape meeting better emissions standards despite the cost. Those who are prudent enough to judge both economic and ecological effectiveness of available options can succeed in saving their market share despite the high production cost. This is evident from the automobile industry's own experience ever since the Supreme Court order on clean fuels in Delhi made alternative fuel strategy a viable option to meet cleaner emissions standards.

Since this wisdom prevailed the indigenous carmakers who otherwise would have taken severe beating in the fiercely competitive market in the wake of tighter emissions regulations chose the alternative fuel route to survive. Companies like Hindustan Motors ( hm ) made a comeback with rtv on cng and cng Ambassador and sought collaboration with the Australia-based oka Motor Company to get cng technology. Mahindra and Mahindra has also joined the bandwagon.

Estimates available in India and from experience worldwide show that alternative fuels strategy is more cost effective in meet ing tighter emission standards than improved conventional fuel technologies. New Delhi-based National Institute of Public Finance and Policy has confirmed in its study that the cost per weighted tonne of emission reduction with particulate trap on diesel vehicles is 60 times higher than the cost of cng retrofitment. Many more automobile companies have expanded their product mix to include alternative fuel vehicles to take advantage of what is now seen as a more cost effective option to meet more stringent standards in the short-term. Only if the government steps in with appropriate fiscal incentives to cushion the incremental costs of alternative fuel strategy can it help to make a quantum leap to catch up with the world standards.

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