As the auto sector struggles to recover its pace, the government must consider going slow on its EV deadlines and contemplate leveraging alternative cleaner gaseous fuels such as auto LPG.
Even before the coronavirus outbreak led to a full-blown financial crisis, the Indian automotive industry had been struggling with headwinds from the larger economic slowdown. By August last year itself, the sector had contracted for the tenth successive month with sales sliding by 40%, the sharpest drop in two decades. Now with the COVID-driven downturn, vehicle production is likely to shrink by 8.3% in 2020 with losses pegged at a whopping Rs 13,000 crore. Around a million jobs could be lost, far worse than last year.
Leading auto components manufacturer Bosch stated that the COVID-19 crisis threatens to set the already-bleeding sector’s turnaround hopes by up to six years. Meanwhile, India also shifted to BS-VI fuel standards, leaving automobile makers with the problem of unsold inventory.
At this juncture, attempting to force the pace on Electric Vehicles, a relatively new technology with a prolonged gestation period, doesn’t sound like a great proposition. Pushing the auto sector to invest in new technology at a time of economic distress might spell doom for many OEMs.
The financial and logistical challenges due to the shift from BS-IV to BS-VI had already been daunting enough. Now to even achieve a 30% migration (diluted from earlier 100%) to electric mobility by 2030 requires massive investment into production lines by the OEMs as also the setting up of colossal charging infrastructure.
As the auto sector struggles to recover its pace, the government must consider going slow on its EV deadlines and contemplate leveraging alternative cleaner gaseous fuels such as auto LPG for an environmental clean-up. Rather than persisting with the policy push on EVs which are still – at least – a decade away, these cost-effective, easy-to-transition options can be deployed in the immediate term. This would also give an impetus to the already stumbling automobile sector.
Auto LPG transition, the immediate antidote
According to the UN International Panel on Climate Change (IPCC), LPG has a global warming potential (GWP) factor of zero, as compared to CO2’s 1 and methane’s 25. Two of the most damaging agents impacting human health – NOx and PM with major origins in vehicular pollution – have near-zero emissions from auto LPG.
In an estimate, a mere doubling of autogas vehicles would reduce global NOx emissions by 4% and PM 2.5 release by 5% apart from an impressive 130 Mt reduction in CO2 emissions on a well-to-wheels (WTW) basis – within the next 20 years itself. This would translate into a massive socio-economic and environmental benefit worth $ 59 billion.
Auto LPG which is already the third widely used automotive fuel globally can therefore play a viable bridging role until EVs can become a reality. It will help bring substantive benefits to the environment, will be easy on consumer pocket at a time of soaring petrol prices and also allow the automotive sector enough leeway to recover.
Paving the way for Autogas & alternative fuels through policy
Due to a highly assured and abundant global supply, an inherently low cost as compared to petrol and diesel, practical nature of transition and sheer number of vehicles available in the country, India could become the next autogas hub in the world, à la South Korea or Turkey. The government needs to realise the benefits of this “low hanging fruit” in its fight to improve air quality.
Incentivising both customers as well as suppliers for this transition is the natural first step. For the end-users to convert their existing vehicles to LPG, in addition to tax breaks and subsidies, a GST reduction for both auto LPG (presently 18%) and LPG conversion kits (presently 28%) would be a much-needed respite.
Then Type Approval norms regulating conversion to gaseous fuels must also be made perpetual in alignment with global/European norms instead of the tedious need for approval every three years. The exorbitantly high nature of this conversion has been definitely deflating for the retro-fitment market. This must be addressed forthwith.
Finally, promoting a basket of alternative fuels including Auto LPG, CNG and ethanol, rather than a singular push on EVs gives the end-user a wider choice of clean fuels to pick from. A series of surveys and online polls had already suggested last year that customers were not ready for electric vehicles as yet.
The Faster Adoption and Manufacturing of Electric Vehicles (FAME-2) policy also stands being extremely vulnerable in the face of the coronavirus crisis. In such circumstances, transitioning of personal vehicles from petrol/diesel to Auto LPG can help the country meet its environmental commitments while leaving room for the automobile sector to thrive and grow while we wait for the slow unfolding of the era of the electric vehicle.
Author: Suyash Gupta, Director General, Indian Auto LPG Coalition
Disclaimer: The views and opinions expressed in this article are solely those of the original author. These views and opinions do not represent those of The Indian Express Group or its employees.
Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds,
calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.