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The Indian government along with consultation of oil marketing companies (OMCs) have decided to advance the roll-out of Bharat Stage (BS-VI) auto grade fuels in Delhi by two years to April 1, 2018, which will bring another round of uncertainty to the automobile industry after demonetisation and GST.
The Indian government is making all efforts possible in mitigating the problem of air pollution in Delhi and surrounding areas. But, it will not be that easy for automakers to meet the demand for BS-VI complaint vehicles.
The Euro BS-VI norms will now kick in effective from April 1st, 2018 rather than the original schedule of April 01, 2020. However, running a BS-IV vehicle on BS-VI fuel is possible which could lead to lower levels of pollution.
The move is to bring down the smog problem in Delhi which has been caused by farmers burning paddy husk across Haryana and Punjab. As a result, the OMCs like IOCL, HPCL and BPCL will now have to be ready with Euro BS-VI compliant fuel in the NCT region by April 2018.
It may be recollected that the original deadline for BS-VI compliance was April 2024 which was advanced by 4 years to 2020. That has been advanced by a further 2 years in case of the Delhi and NCT region.
“For auto companies, it will be a repeat of the April 2017 situation when the court ordered a blanket ban on the sale of BS-III compliant vehicles after April 2017. Therefore, auto companies selling in the Delhi and NCT region will have to plan their inventories well in advance to avoid any backlog of inventories of BS-IV vehicles,” Shrikant Akolkar, Research Analyst- Auto, Angel Broking said.
“It could be negative for auto companies which predominantly sell in the Delhi region. This brings another round of uncertainty in the automobile sector after demonetization, BSIV transition, and GST. We believe that autovshares will see some volatility on this news,” he said.
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