NGT order misplaced, doesn't factor in common man, say pros

The National Green Tribunal (NGT) on Monday ordered the Delhi Road Transport Department to de-register all diesel cars which are older than 10 years.To discuss the ramifications of this order in depth CNBC-TV18’s Ronojoy Banerjee spoke to two eminent guests Vikram Kirloskar, Vice Chairman, Toyota Kirloskar Motor and BVR Subbu, Former CEO, Hyundai India. Subbu thinks the order is misplaced and the consumers’ interest has not been taken into account at all. According to him, the NGT does not realise that vehicles do not cause pollution but engines do. So the customers should have been given an opportunity to convert or upgrade their engines to comply with emission norms.He said there are some people who maintain their vehicles very nicely and it could also be that a 10-year vehicle may have run lesser kilometers than say a 7-year vehicle. So in that case, who is emitting more pollution is the question. Therefore, the yardstick should not have been based on the number of years the vehicle has spent on the road but by the number of kilometers on the road. Agreeing with Subbu, Kirloskar says the order should have been emission-based. It should have thought about how it would impact the common man.Kriloskar says it would have been better if the NGT would have come out with a step-by-step ban because policing this kind of order is very difficult. It should have started with Bharat Stage Zero, then stage I, after a few months stage II and after a year maybe stage III, which would have been logical.When asked if the company would look at discontinuing diesel engines, Kirloskar said no, in fact they would continue manufacturing high tech diesel engines because the Bharat Stage VI has the capacity to reduce carbon emission to an acceptable level and one needs diesel to get the carbon footprint down. Below is the transcript of BVR Subbu and Vikram Kirloskar's interview to CNBC-TV18's Ronojoy Banerjee. Q: I am curious to know is this the day of perhaps mixed feelings for the auto industry because for the longest time the principal argument that the industry had put forth was that why vilify and pick on the more clean diesel technology which BSIV pick on BSI, II and III. In this case the National Green Tribunal (NGT) has indeed done that, they have now banned diesel vehicles over 10 years from the Delhi NCR region, but at the same time has come down very heavily on diesel technology. Your thoughts? Kirloskar: Well, I think as an industry it may be a big occasion for us saying that there is a big chance of selling more cars, but I think one has to look at it little more carefully. Yes, of course, the opportunity is for us as an industry, but this kind of an order is very, very important to be implemented. It is required for improving the environment in Delhi, but it has to be implemented. I would have preferred something where the results step by step ban on vehicles starting with Bharat Stage Zero, then stage I, after a few months stage II and after then stage III maybe after a year, which is logical for society to appreciate. Policing this kind of order is very difficult, if you say suddenly ban are you going to expect all these vehicles to be off the road, will they be parked on the roads, what will happen. It is difficult to do. We have to take society along with us in the fight against pollution to make sure it’s implementable, so I hope maybe they relook at it and do it in a period of say a one year time starting with stage zero going up to stage III or over a period of two years so that things worked. This can hurt the common man if it is done at one shot, be difficult to police and difficult to implement that’s what my worry. It is a good order but these are the issues which I think regarding implementation which have to be looked at. Q: In December 2014 is when the NGT had first raised concerns about diesel vehicles and at that point in time, they did indicate that 10 year plus vehicles should be slowly phased out. It just so happen that that order was never implemented and that is why today they have actually directed the RTO to do precisely that. A word on the customers because I have got some data from the auto companies it has not been entirely corroborated as now, but the sense that I am getting is that over 1 million diesel vehicles are there in the Delhi NCR region that are 10 year old plus. What happens to these customers now? Subbu: Well, I think over the last year or so a lot of the diesel vehicles which is of more than 10 years old have actually probably moved out of Delhi, but the 1 million figure seems to be a little high side, it is tad on the high side. Having said that I think this whole order is misplaced as far as the consumer is concerned. I think the NGT doesn’t really recognised the fact that engines caused pollution vehicles don’t, so technically for instance you allowed customer with a 10 year old vehicle to perhaps bring in a brand new engine on to his vehicle. He would actually have meet the requirements of NGT is setting out in terms of emissions and so on without really burning a hole in his pocket or for instance if you allowed a customer who had a 10 year old diesel vehicle to actually convert to CNG or hybrid or something else then you would meet the same objective without really hurting the consumers so much. I think the consumers’ interest has not been taken cognisance at all. It is a great thing for the auto industry. What I expect to see in the auto industry and the auto industry has been quite famous for this, you will see a push towards super ordinary profits through pricing and so on because when there a such thing happening, because there will be a sudden spurt of demand and what better could be industry hope for. Now these are things that the government ought to have taken to. Look at it differently just because the car is 10 years old for instance and if it does let say only 25,000 kilometres a year, but a seven year old car does 200,000 kilometres a year who is polluting more. So I think a lot of the stuff that the NGT has done is not kosher with as far as consumers are concerned. I think consumer have got the short end of the stick on this. Q: The auto industry stands to make supernormal profits owing to an order like this. Recently the government has also issued a white paper on the scrappage scheme where the government has very categorically said that apart from the excise exemptions that the government will be giving to incentivise replacement of older vehicles, they have also asked the auto industry to dole out discounts because this is also going to have a spill over benefits, it is going to see your overall volumes increase much like what we have seen in the United Kingdom. In such a situation is the auto industry now also willing to offer discounts and how much are you willing to dole out to customers to actually go in and replace their older vehicles? Kirloskar: I am not sure about the super-duper profits because whatever vehicles that are removed from Delhi if at all will go to other parts of the country. There may be 10 year old vehicles which are still serviceable and there may be customers for that in other parts of the country where there is no such ban and sales in those areas may come down, the price of used vehicles will come down. If you look at typical retail financing, it is based on the price of a newer vehicle and the price of the used vehicle. So, used car market values are certainly going to come down in Delhi. These vehicles will certainly go out of NCR. However couple of important issues which in some things I agree with Subbu, one is that this should be a mission, there should be a different kind of a basis on which you remove a vehicle. Some people maintain their vehicles very well. Even after 10 years they work excellently with low emissions but typically I feel it should be emission based where you take Bharat Stage 0 vehicles first then stage I, stage II, stage III and stage IV is still very clean and need not be removed from the scene, that's one part. Second part is I am worried, more than the consumer about how will commerce run. If you suddenly remove so many vehicles off the street especially vehicles which are moving material, moving men, that is busses or transport vehicles, what will happen to the common man and how will he be able to work, this is a big issue which I think has not been looked at. If it is done instantly then there is a big problem. What about railway engines, what about diesel generators which are more than 10 years old? There are a whole lot of things. Currently stage IV is quite excellent. There is a big difference in stage IV and we are committed to stage VI which is superb. We need the diesel technology to reduce the carbon footprints as well. Subbu: Kirloskar is right that Bharat Stage IV vehicles which are in good fettle are quite okay in terms of meeting emission norms. The issue is if you want to really look after commuter interest also, allow customers, allow consumers and buyers of vehicles of older vehicles to change their engines. Give them a new lease of life and then your problems are solved without causing huge disruptions. I think the auto industry should have argued this point. Unfortunately we seem to be held hostage by environmentalists, that is a concern. I think the auto industry could have projected its view point better, looked at the consumer viewpoint, allow vehicles to actually get a new life. You can actually Bharat Stage III vehicle and convert it and upgrade it to meet Bharat Stage IV standards even in authorised workshops, why isn’t someone looking at solutions like that, those are simple cost efficient, consumer friendly solutions. Q: This order currently pertains to Delhi NCR, we of course have the Supreme Court which should come out any day now. Are auto companies now preparing for a future where diesel vehicles will become increasingly uneconomical for consumers to actually purchase especially in the light of Supreme Court mauling imposing a cess. Is now diesel being completely taken out of your equation when you are making long term vehicle planning? Kirloskar: No, I don’t think that is true, because we have look at the Corporate Average Fuel Economy (CAFE) Regulation as well and to meet CAFE Regulation as well as the carbon footprint, which the Government of India has committed and the long term carbon footprint is going to be very difficult to do it without diesel. Stage VI is certainly going to reduce the NOx and CO2 emissions and particulate emissions to a very acceptable level, but you need the diesel to get the carbon footprint down. Diesel is a higher calorific value fuel and without meeting CAFE norms is difficult, so we are definitely going to continue with diesel, very clean diesel engines, high technology diesel engines I think they are going to be the way of the future. Small car is another story. It may be difficult to do Stage VI and the size of the car and the price equation, but I still think carbon footprint is also equally important.