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    2. SIAM is the Apex National Body representing Indian Automobile Industry

      SIAM Key Policy and Regulatory Initiatives

      SIAM Policy Brief

      Key Policy and Regulatory Initiatives in Indian Automotive Industry since 2006:
      Impact, Challenges and Opportunities

      September 2017

      Key Policy and Regulatory Initiatives in Indian Automobile Industry
      since 2006: Impact, Challenges and Opportunity


      • 1. Executive Summary
      • 2. Overview

        In pre-independence India, cars were mostly assembled or imported from England and the manufacturing of cars in India was started in 1950s. The manufacturing of automobiles received a major boost due to the economic liberalization and delicencing of the industry along with permission for 100% Foreign Direct Investment (FDI) in 1991 in automobile sector. Since then the automobile manufacturers like Tata Motors Ltd., Maruti Suzuki India Ltd., Mahindra and Mahindra, Ashok Leyland Ltd., Hyundai Motor India Ltd. have achieved the status of major automobile manufacturers in the country. The key players in two-wheeler sector are Bajaj Auto Ltd., Hero MotoCorp Ltd., TVS Motor Company Ltd., Honda Motor Cycle & Scooters Ltd. and India Yamaha Motor Ltd. Today, India is exporting various types of vehicles to several countries and the export was recorded USD 8.857 billion in 2015-16. Several other big players of the automobile sector like Fiat India Ltd., Ford India Ltd., General Motors India Ltd., Honda Cars India, Skoda India etc. have established their manufacturing base, operations and joint ventures in India. More automobile manufacturers viz. Kia Motors, PSA Peugeot, Lexus, Genesis, Acura and Chinese manufacturers like SAIC Motors, Foton Motor and Changan Automobiles are also the in process of establishing their manufacturing base in India.

        The automobile sector, globally, is one of the most technically regulated industries. In India too, the technical requirements are based on the European Regulations which are adapted to Indian driving, road conditions and implemented through the Central Motor Vehicle Regulations (CMVR) under the Motor Vehicles Act. The Government is committed for taking all possible measures, strategies and initiatives to make India a top automobiles manufacturing nation as a part of ‘Make in India’ programme with minimum Government and maximum Governance for providing conducive business environment and ease of doing business. India has already achieved the distinction of being world’s top ranking in manufacturing of Two Wheelers (2Ws), Three Wheelers (3Ws) and Tractor whereas it has fourth position in Light Commercial Vehicles (LCVs) and fifth in Heavy Commercial Vehicles (HCVs). At present, the automobile industry of India is the fifth largest in the World and third in Asia in terms of exporting Passenger Cars.

      • 3. Profile of Automobile Industry

        The Indian automobile space is dominated, in number term, by Two-Wheelers constituting about 80 percent market share and overall Passenger Vehicles (PVs) comprised of 13 percent. Presently, India is producing several types of vehicles needed for personal, commercial, defence, sports, and recreation purposes. With the several pro-industry initiatives taken by the Government like rationalizing the regulatory policies and tax regime, making robust testing, homologation, Research & Development (R&D) infrastructure etc. the industry has consistently and steadily evolved itself and made strides for higher growth. It is estimated that by 2020 the automobile industry in India will be the third largest in the World after China and USA.

        As per the Automotive Mission Plan (AMP) 2016-26, the growth of vehicles particularly the passenger vehicles is expected to triple to 9.4 million units per annum by 2026. During April-March 2017, the total annual production of all vehicles was 25,314,460 which includes passenger vehicles, commercial vehicles, three-wheelers, two-wheelers and quadricycles against 24,016,068 vehicles produced during April-March 2016. The sales of PVs, CVs and 2Ws grew by 9.23 per cent, 4.16 per cent and 6.89 per cent respectively for the period of April-January 2017. In April-March 2017, the total export was 34,78,268 vehicles against 36,43,494 vehicles in April-March 2016 and accordingly the export was slightly declined by 4.50 percent during the said period. This sector contributes 7.1 % of total GDP, 26% of Industrial GDP and about 49% of the country’s Manufacturing Gross Domestic Product (MGDP). The automotive sector provided direct and indirect employment to 32 million (approximately) by 2016. As per the decadal AMP 2016-26, the automobile sector has the potential to generate USD 300 billion revenue, contribution of 12% of total GDP and creation of 65 million jobs by 2026.

      • 4. Programmes / Plans initiated by Government

        The automobile sector in India has immense potential for driving economic growth and employment and also supporting a host of other manufacturing industries like auto-components, machine tools, steel, aluminum, plastics, chemicals, electronics, etc. In addition, the auto sector also supports the services sector which include IT and software, banking, insurance, repair and maintenance, transport and logistics including public transport etc. The Government of India had not only simplified and streamlined the regulatory policies framework for ease of doing business but also launched Automotive Mission Plans for 2006-2016 in 2006 and AMP 2016-2026 in 2016. The other major programmes/plans initiated by the Government include Faster Adoption and Manufacturing of (hybrid &) Electric Vehicles (FAME) and National Electric Mobility Mission Plan (NEMMP) 2020. These programmes/plans envisioned a robust and faster growth of vehicles to attain the coveted place among the world leaders in automobile sector like USA, Japan, Europe and China. The major programmes/plans are outlined hereunder:

        • (i) Automotive Mission Plan 2006-2016

          In 2006, the Government of India launched an Automotive Mission Plan, a ten-year roadmap for promoting growth, achieving technological competence and maturity accomplishing a status of world class automotive manufacturing hubs with well evolved forward and backward linkages for sustainable automotive growth. The AMP 2006-2016 envisaged an ambitious roadmap with growth oriented targets to achieve the annual turnover to USD 145 billion and the export growth with a larger ambition for becoming a major automotive export hub too. Apart from becoming a major "destination of choice in the world for the automotive engineering and design, the AMP 2006-2016 visualized output accounting for more than 10 per cent of GDP and providing additional employment to 25 million people by 2016". The combined production of vehicles during the AMP-2006-16 was recorded 142 million, against the set target of 192 million. The total production for commercial vehicles was 7.1 million units against the target of 6.7 million, higher than the target. The sale of passenger vehicles during the said decade was 27.91 million units, against the target of 27.75 million units. The cumulative sale of three wheelers was 7.8 million, outperformed by 9 percent under the three-wheeler category whereas sale of two wheelers was declined by 25 percent.

          In 2006, the total revenue generation under this sector was around USD 28 billion and whereas AMP 2006-2016 targeted a turnover of Rs 5,61,200 crore to Rs 7,31,400 crore. The execution of AMP-2006-2016 pushed the turnover to Rs 6,01,000 crore in 2015-2016. At the end of AMP 2006-2016, it generated 32 million jobs against a target of employment of 25 million people, including direct and indirect jobs. The contribution of automotive industry to GDP reached to 7.2 percent approximately, against the target of 10 percent set in AMP 2006-2016.

        • (ii) Automotive Mission Plan 2016-2026

          After the successful completion of the AMP 2006-2016, the Government has formulated another AMP 2 - 2016-2026, a curtain raiser for further consolidating the automobile growth by setting targets and goals for the next ten years started from 2016. The final version of AMP 2016-2026 is being readied by the MoHI&PE. Like previous AMP, the present AMP 2016-2026 is focused on strategies for enhanced automotive growth, contribution to GDP, minimizing carbon footprints, attaining high level of technological competence & maturity. The AMP 2016-26 is being executed with better planning, time targeted strategies in coordination with all stakeholders to meet the growth and export targets.

          The AMP-2026 is aiming for sustained automotive growth with revenue of USD 260 billion to 300 billion in 2026. The AMP-2026 focuses on the segmental growth in passenger vehicles to be 9.4 - 13.4 million units, commercial vehicle between 2.0 - 3.9 million units, two-wheelers to 50.6 - 55.5 million, and tractors to 1.5 - 1.7 million units. The overall objective is to bring India at par with the global giants of the automotive sector of the world with contribution over 12% to GDP. The AMP-2026 strives to achieve job creation for 65 million people by the end of 2026 and increasing the exports to 35-40 percent of overall output. In addition, the AMP-2026 envisaged end of life policy of vehicles, universalization of BS-IV norms and up-gradation to BS-V/VI emission norms. Currently, the BS-IV norms are being implemented across the country from 1st April 2017 and BS-VI norms (leapfrogging) are to be adopted by April 2020 as notified on 16th September 2016 by the Ministry of Road Transport and Highways.

        • (iii) National Electric Mobility Mission Plan (NEMMP) 2020

          The National Electric Mobility Mission Plan (NEMMP) 2020 was conceived and launched in 2013 to promote EVs and HEVs to enhance the domestic manufacturing capabilities to ensure ecological and energy security. The NEMMP envisages strategies to achieve the objective of efficient, environmentally friendly, affordable EVs by 2020. The NEMMP 2020 aims for production of 6-7 million units per annum by 2020 with full range of Electric Vehicles (xEVs) and fuel savings of 2.2 – 2.5 million tons by 2020. The implantation of NEMMP is expected to bring down the vehicular emissions and reduce GHG like Carbon Dioxide (CO2) emissions by 1.3% to 1.5% by 2020.

          To execute and implement the NEMMP, the Government is facilitating and supporting the charging infrastructure and development of indigenous battery technology which is fast charging, high capacity and high range of per charge run. The Government is supporting automotive testing including R&D for India specific innovation to minimize the operational cost of vehicles. Accordingly, the Government had made a provision for Rs 13000 – Rs 14000 crore over the next 5-6 years. However, the allocation was restricted to 795.00 crores to support a two-year (2015-16 & 2016-17) Phase I of the Project called the FAME Scheme. Total expenditure of phase-I was Rs. 219.00 crore only.

          The private sector is also required to invest for EV manufacturing including its critical components that include advanced battery manufacturing and the electronic management systems etc. Major automobile manufacturers like Mahindra & Mahindra, Tata Motors, Maruti Suzuki, Ashok Leyland, Hyundai, Tata Motors, Hero Motors Corp, TVS Motors Company, Honda Motor Cycle & Scooters are at various stages of developing the various types of electric vehicles. Mahindra & Mahindra is ahead of others and has been manufacturing pure EVs in India for many years. Recently, the Indian Space Research Organization (ISRO) has signed a memorandum of understanding with BHEL to set up a production plant of low-cost lithium ion batteries for EVs. Other public-sector undertakings like National Thermal Power Corporation and Power Grid Corporation are foraying into business of setting up of charging infrastructure (charging stations) for promoting clean energy transportation in the country. Other private companies Like Tata Power, JSW Energy are also in process entering into the business of electric mobility related infrastructure.

        • (iv) Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles

          In April 2015, the Government launched a scheme for the Faster Adoption and Manufacturing of (HEVs &) Electric Vehicles (FAME India) with a budget of Rs. 795 crore for the first phase (2015-16 & 2016-17) of the scheme. Under the scheme, incentives are provided to electric and hybrid vehicles of up to Rs 29,000 for bike and Rs 1.38 lakh for car. However, the Government had allocated Rs 795.00 crore for FAME phase I but only Rs. 219.00 crore was utilized in phase-I of the scheme.

          The Phase I of the scheme ended in March 2017 but it has been extended to September 30, 2017. The scheme aims to facilitate the creation of a market for HEVs and EVs across all vehicle segments – cars, motorbikes, buses, commercial vehicles etc. The promotion of HEVs and EVs is expected to ensure much needed energy and ecological security. In addition, it will encourage the development of indigenous technology and R&D capabilities so that the whole range of hybrid and electric components can be manufactured in India. As of now no decision has been taken on the phase-II of FAME India programme. The FAME India programme has recently been transferred to NITI Aayog for executing and steering the EVs programme for 100% electric vehicles by 2030 in an inclusive manner.

        • (v) The National Automotive Testing R&D Infrastructure Project (NATRiP)

          The Government has initiated a flagship National Automotive Testing and R&D Infrastructure Project (NATRiP) which was approved by Cabinet Committee on Economic Affairs (CCEA) in July 2005 to create a testing, validation and R&D infrastructure, with the investment of Rs 1,718 crore for setting up of seven auto testing facilities at seven locations across India by 2011. The purpose of the project was to develop infrastructure for world class automotive testing and homologation with objective of helping Indian automobile industry to adopt and implement world class standards for safety, emissions and performance. To steer the implementation of the project, a NATRIP Implementation Society (NATIS) was set up. The total cost of the project was Rs. 2288.06 crore up to December 2014. The revised outlay of Rs. 3727.30 crore has been approved by the cabinet in July 2016 for a duration started from 1st January 2015 to December 2017. The NATRiP project is being implemented under the overall control and supervision of MoHI&PE.

          Under the NATRiP, following centers have so far been set up to carry out the testing and certification for emission standards, vehicle safety and performance (1) Automotive Research Association of India (ARAI), Pune (2) National Automotive Test Tracks (NATRAX), Indore (3) Vehicle Research and Development Establishment (VRDE, an organization under the Ministry of Defence), Ahmednagar (4) International Centre for Automotive Technology (ICAT), Manesar (5) National Institute for Automotive Inspection, Maintenance and Training (NIAIMT), Silchar (6) National Center for Vehicle Research & Safety (NCVRS), Rae-Bareli (7) Global Automotive Research Center (GARC), Chennai.

        • (vi) New Green Urban Transport Scheme (GUTS), 2017

          The Government has recently conceptualized a new scheme called ‘Green Urban Transport’ for improving and upgrading the public transport in urban areas along the low carbon pathway. The scheme envisages to reduce the carbon footprint and to promote low carbon sustainable public transport system. The scheme will help provide a sustainable framework for funding urban mobility projects with minimum recourse to budgetary support by encouraging innovative financing of projects. Under the Green Urban Transport Scheme (GUTS), the government would focus on creating non-motorized transport infrastructure, adoption of intelligent transport systems (ITS), increasing access to public transport, use of clean technologies and participation of private sector would be encouraged. The scheme will be executed with the help of private sector including assistance from the central and state governments under a seven-year mission with a total cost of Rs 70,000 crore for which 103 cities have been identified in the first phase. The financial arrangement envisages 10% of total outlay will met by urban local bodies and 30% each by the Centre and States, and the rest would be raised as loan by multi-lateral agencies. Initially, the scheme is proposed to be executed in cities with a population of 5 lakh and above and all the capital cities. An initial amount of about Rs.25, 000 crore as central assistance, is proposed to be made available for the project.

          The scheme will push for low carbon public urban transport and promote the use of hybrid/electric vehicles and non-fossil fuels including promotion of Non-Motorized Transport (NMT), public bike sharing, Bus Rapid Transit (BRT) systems, Intelligent Transport Systems (ITS), urban freight management etc. The scheme may provide a strong trigger for manufacturing of more fuel-efficient, hybrid, electric and low carbon/ clean-fuel based vehicles. The scheme will be implemented after the approval of the Cabinet.

        • (vii) Smart Cities Programme

          The Government of India has launched the Smart Cities Mission on 25 June 2015 to promote sustainable and inclusive cities that provide core infrastructure, clean environment, low carbon transportation which is affordable and sustainable and give a decent quality of life to its citizens. The Smart Cities Mission for development of 100 smart cities and Atal Mission for Rejuvenation and Urban Transformation (AMRUT) of 500 cities provides for outlays of Rs. 48,000 crore and Rs. 50,000 crore respectively with the objective of making our cities more livable, sustainable and inclusive besides driving the economic growth.

          The NITI Aayog has formulated a three-year action plan providing convergence of major programmes like Atal Mission for Rejuvenation and Urban Transformation (AMRUT), Smart Cities Mission, and promotion of low carbon transport. For developing smart and sustainable cities, the Union Budget 2016-2017 allocated about Rs. 7,296 crore from the schemes of Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and Smart Cities Mission. Out of the said budget, an amount of Rs. 3,205 crore for developing 100 smart cities across the country by 2020, while about Rs. 4,091 crore released for AMRUT. The MoUD had in June 2016 released the guidelines and mission statement for the project to develop 100 such cities. The smart cities scheme comprised of three phases. In the first phase 20 cities, 40 cities the second phase and the rest cities are covered in the third phase. Under the programme, each selected city will be given Rs 500 crore over a period of five years by the Centre, with a matching contribution by the respective states. Therefore, the automobile sector has immense opportunity to contribute low carbon and affordable transportation in developing the smart cities.

      • 5. Transformational Regulatory Policies initiated by Government

        The landscape of regulatory policies in automotive sector in India is highly dynamic and rapidly evolving and changing fast. Like Information Technology and Telecommunication sectors, the future of automobile industry is at cusp of a complete transformation. So far, the policies and regulations under the automobile sector have been incremental and gradual, however, the recent decisions like leapfrogging to BS-VI emission norms, 100% electric vehicles by 2030 in public sector, methanol economy, fuel efficiency norms etc. are metamorphic with highly compressed transitional phases as compared to the transition time given to industry in other countries, and will have profound impact on entire automotive ecosystem. Some of the transformational regulatory policies that may have radical impact on the automotive sector are outlined below:

        • (i) Tightening of Emission Norms and Leapfrogging to BS-VI Norms

          In view of improving the air quality of our cities and towns, Bharat Stage emission standards were first introduced in 1991-1992. Thereafter progressively and steadily, the stringent norms have been rolled out. In 2000 and 2001, BS-II norms were implemented in Delhi, Kolkata, Mumbai and Chennai and BS-I norms were made mandatory in the rest of the country. Since April 2010, Bharat Stage (BS) III norms have been enforced across the country and Bharat Stage IV emission norms in 13 major cities.

          On 19th December 2012, the Ministry of Petroleum and Natural Gas, Government of India constituted an Expert Committee to recommend a roadmap for auto fuel vision and policy till 2024 for the country. As per the roadmap suggested by the Expert Committee, BS-IV Emission norms are to be rolled out in a phased manner by 1st April 2017, across the country and BS-V norms were slated to be rolled out by 2020 whereas BS-VI norms by 1st April 2024. However, due increasing levels of pollution in cities the Government in January 2016 took a major policy decision to leapfrog directly to the BS-VI Emission Norms for vehicles (with 10 ppm Sulphur fuel) skipping the BS-V norms and that too with preponing the implementation date to 1st April 2020, across the country as one-country one-fuel norm advocated by SIAM. The BS-VI emission norms have been notified on 16th September 2016 by the Ministry of Road Transport and Highways in the CMVR, 1989.

          The leapfrog to BS-VI norms by 2020 skipping BS-V emission norms will reduce 82% in the emission of particulate matter and 68% in NOx emission in diesel cars. The additional benefit is only in terms of NOx emissions, which is tightened by additional 40% over the BS V levels and HC + NOx is tightened by additional 20%. Around 50% additional reduction in emission of particulate matter and an additional reduction of 44% in the emission of NOx is expected in heavy duty diesel vehicles. Therefore, emission benefits by leapfrogging is maximum in the segment of heavy duty vehicles.

        • (ii) 100% electric vehicles in Public and 40% in Private Sector by 2030

          The National Institution for Transforming India or NITI Aayog, has launched a report on ‘India Leaps Ahead: Transformational Mobility Solutions for All’ on 12th May 2017 for a complete transformation of mobility to 100% electric vehicles in public and 40% in private sector by 2030. The report of the NITI Aayog envisioned a paradigm shift of mobility by adopting new and sustainable model for clean, cost-effective, efficient that is not only safe but job oriented, least energy intensive (reduced oil import bill) but also have minimum adverse impact on environment and human health. The report envisages three phased roadmaps for Electric Mobility up to 2032. The 1st phase (2017-2019) will focus on institutional capacity building and aggregating Interoperable Transport Data (ITD) with enabling mobility solutions. The 2nd phase (2020-2023) focuses on the development of markets, infrastructure and production capabilities in tandem with innovative business models. In the last phase (2024-2032), it is expected that the costs of EVs would come down significantly and achieve economies of scale.

          All electric vehicles by 2030/32 will transform the way people will travel in future. The model shift benefits inter alia include drastic cut by 64% in energy demand and 37% in Carbon emission by 2030/32. Further, this shift can help India to save nearly Rs. 3.85 lakh crore by 2032 in diesel and petrol cost and save one giga ton of carbon emissions between 2017 and 2032. Further, the levy of GST at the rate of 43% on the hybrid cars and 12% GST rate on EVs makes it clear that the Government is clearly promoting the electric vehicles only. There are indications that demand for making zero GST rate for EVs is under the active consideration of the Government to achieve the target of 100% EVs by 2030 in public sector.

        • (iii) Fuel Efficiency Norms

          The Government of India has recently notified the new fuel efficiency norms for passenger vehicles in April 2015. The new fuel efficiency standards have come into force in April, 2017. The fuel economy standards have notified for petrol, diesel, liquefied petroleum gas (LPG) and compressed natural gas (CNG) passenger vehicles. The standards are based on a Corporate Average Fuel Consumption (CAFC) system. The regulations envisaged that between 2017 and 2022 cars should be 17% more fuel efficient.

          The new norms were formulated by the Bureau of Energy Efficiency (BEE) and notified under the Energy Conservation Act, 2001. As per the notification, these fuel efficiency standards are being implemented by the Ministry of Road Transport and Highways. After the implementation of these standards, India will also join the league of developed nations such as United States, Europe, Japan and China, who have a mandatory fuel efficiency regulation for passenger cars. Recently in August 2017, the Government has notified the fuel efficiency norms for Heavy Duty Commercial Vehicles (HDVs) i.e. diesel vehicles of category M3 and N3 with gross vehicle weight of twelve tonnes and above, complying with BS-IV emission norms; the norms will be effective from April 2018. A star-based rating system has also been proposed by the BEE to rank the vehicles on a scale of one to five stars based on their fuel efficiency. However, as a voluntary initiative, SIAM members have been voluntarily declaring fuel efficiency values of all passenger cars since the year 2009 which is available at the point of sale and also on the SIAM website.

        • (iv) End-of-Life (ELV) of Vehicle Policy

          The vehicle owners in India tend to continue to use their vehicles well beyond the expected life of the vehicle. Such vehicles emit higher emission, have lower fuel efficiency and lesser safety features. Therefore, there is a need for an incentive based scheme to encourage vehicle owners to replace their older vehicles with new generation products which are more efficient, safe and environmentally benign. At present, India does not have a robust national policy on end-of-life of vehicles, though the Government is working on it for quite some time. The Government had published a draft policy two years ago for consultation with stakeholders and public. The Voluntary Vehicle Fleet Modernization Programme (V-VFMP) is aimed at encouraging people to get their vehicles scrapped and replace them with modern, more fuel-efficient and less-polluting ones by offering tax and other benefits. The stated policy is yet to be notified by the MoRT&H, Government of India. Currently, there are guidelines formulated by the Central Pollution Control Board (CPCB) that are focused on dismantling and recycling of old vehicles in an environmentally sound manner.

          The policy on the end-of-life vehicles is keenly awaited by the industry as well as public who are expecting attractive incentives for replacing their old vehicles and the industry may get a business opportunity. To implement the ELV scheme successfully, it is imperative that the existing cumbersome registration and deregistration systems in the country are revamped completely. The certification for the registration and deregistration of vehicles is provided under the Central Motor Vehicles Act 1988. The present system is marred by procedural inadequacies, malpractices, lack of transparency etc. therefore, a harmonized and transparent system that empowers the RTOs to de-register all ELVs including from other state jurisdiction where the vehicle was originally registered is urgently needed. The whole process of ELVs should be computerized and should made online for improving effectiveness of registration / de-registration of vehicles for better implementation of ELV policy.

        • (v) Vehicle Safety Norms

          The vehicles manufactured in the country are complying the safety norms followed internationally, however, the number of accidents and number of deaths occurring on the Indian roads are about 1.5 lakh which is alarming and a serious matter. In this regard, a report by the World Health Organization revealed that India accounts for more than 10% of the world’s 1.24 million yearly traffic deaths. The Working Group on Road Accidents, Injury Prevention & Control set up by the erstwhile Planning Commission assessed the cost of road accidents in India at US$9 billion - a staggering 3% of the nation’s GDP. To mitigate the occurrence of roads accidents, the Government has taken a multi-prong approach and to amend the Central Motor Vehicle Act, 1988 for bringing disciplined and safe transportation to minimize road accidents thereby minimizing deaths and injuries. The bill caps the maximum liability for third party insurance in case of a motor accident at Rs 10 lakh in case of death and five lakh rupees in case of grievous injury. The bill provides for a Motor Vehicle Accident Fund which would provide compulsory insurance cover to all road users in India for certain types of accidents. The bill defines taxi aggregators and provides for: (i) amending the existing categories of driver licensing, (ii) recall of vehicles in case of defects, (iii) protection of good samaritans from any civil or criminal action, and (iv) increase of penalties for several offences under the CMVA,1988. The bill was pending in the Parliament for debate and passage, however, the bill has now been referred to the Parliamentary Standing Committee of the Parliament during the monsoon session, 2017.

          World over for prevention and control of accident, the main thrust has been on generally accepted 4 E’s viz. (i) Education; (ii) Enforcement; (iii) Engineering; and (iv) Environment and Emergency care of road accident victims. In this regard, the Government of India has been focusing on all these four approaches in its policies and programme. Further, the scheme of National Highway Accident Relief Service Scheme (NHARSS) provides for lifesaving equipment like cranes, ambulances and other paraphernalia to States/UTs/NGOs for relief and rescue measures in the aftermath of accidents to minimize the human loss and recovery for injured.

        • (vi) Harmonization of Vehicle Regulations (UN-WP.29)

          The World Forum for Harmonization of Vehicle Regulations (United Nations Working Party.29) is in existence for more than fifty years. The World Forum administers three Agreements: (i) Agreement-1958 concerning construction of vehicles viz. adoption of uniform technical prescriptions for wheeled vehicles, equipment and parts which can be fitted and/or be used on wheeled vehicles and the conditions, (ii) Agreement-1998 concerning the establishing of Global Technical Regulations (GTRs) for wheeled vehicles, equipment and (iii) Agreement-1997 concerning periodical technical inspections covering adoption of uniform conditions for periodical technical inspections of wheeled vehicles. The Forum is participated the major motor vehicle producing countries of the World.

          India is signatory to the United Nations Working Party 29 (UN WP 29) 1998 Agreement since 2006 and is active participant in the Global Technical Regulation debates and facilitates decision making by contributing data and subject matter expertise. The WP is comprised of six permanent Working Parties, i.e. subsidiary bodies that consider specialized tasks, consisting of people with a specific expertise like Noise, Lighting and Light-Signaling, Pollution and Energy, Brakes and Running Gear, General Safety Provisions and Passive Safety. The meetings of WP 29 and its subsidiaries are attended by India which is an active member of WP-29 1998 Agreement and its various subsidiary Committees set up to formulate various safety regulations. The technical regulations are regularly reviewed by Automobile Industry Standards Committee (AISC) and its recommendations are considered by the Technical Standing Committee on CMVR for adoption and subsequent notification by MoRT&H under the CMVR. Presently, India has more than 70% safety regulations which are either partially or fully aligned with GTRs and UN Regulations while keeping in view the Indian specific driving and environmental conditions. To have a strategized approach for adoption of progressive safety features, SIAM had formulated a roadmap for Automobile Safety Standards. The Alignment of Indian regulations (AIS / BIS) with GTRs / ECE is being expedited in line with this broad roadmap.

        • (vii) Alternate Fuels

          The Ministry of New and Renewable Energy (MNRE) was the nodal Ministry for alternate fuels of the Government of India at the central level, however, the mandate for all matters relating biofuels has been allocated to MoP&NG in August 2017. Henceforth, the National Biofuel Policy, Research & Development, marketing, blending, laying down standards for blending etc. will be handled by the MoP&NG. Despite the policy measures, the target of blending of bio-diesel and bio-ethanol up to 20% by 2017 could not be achieved. The achievement of blending biofuels in gasoline and diesel has not even touched 5% so far due to inadequate manufacturing capacity and non-availability of non-edible vegetable oils and molasses. Since these biofuels are renewable and low carbon fuels, production of biofuels has been re-emphasized. India has recently established the country's first second-generation (2G) Ethanol plant at Kashipur in Uttarakhand in 2016 to convert all types of agricultural residues to ethanol, with optimum product yields. The plant, which has a capacity to consume 10 ton of biomass per day, is based on a globally competitive indigenous technology. Another new advanced bio-refinery plant set up in 2017 at Pune has integrated production capability of one million litre a year of ethanol from a variety of biomass and a range of agricultural waste.

          On 2nd May 2017, the NITI Aayog has come up with a plan and has announced a complete transitioning to alternate fuel like methanol produced from coal, biomass. The Union Minister for Transport on 11th September 2016 announced that India will leapfrog to ‘Methanol Economy’ to reduce the import oil bills as well as to reduce the emissions. A feasibility study under the auspices of NITI Aayog had revealed that the ‘Methanol Economy’ has potential to address the twin challenges of burgeoning oil import bill as well as country’s growing carbon footprints. The NITI Aayog is working on the methanol blending up to 85% (M-85) with gasoline. Further, to provide an impetus to the methanol economy, on 31st July 2017, Minister, MoRTH held a high-level meeting of secretaries of line ministries. In the said meeting, the NITI Aayog was directed to expedite a study on the standards developed by China for various methanol powered vehicles for consideration of the Government.

      • 6. Judicial Interventions

        Involvement of Judiciary in the recent times is understandable due to perceived adverse societal impact of vehicles on environmental and road safety. The National Green Tribunal (NGT), High Courts or the Hon’ble Supreme Court while adjudicating on petitions received from the public, NGOs and including courts on their own motions, issued directions and orders to Centre and State Governments for faster redressal of public grievances. Sometime, this has resulted in actions by the Government that may not be always within the policy framework of the Government. Some of the landmark orders, which had led to paradigm shift in road transportation, inter alia include mandating of CNG in Delhi and moving to Euro II emission norms in the year 2000 in NCR.

        Recently in 2014, NGT had banned plying of any petrol and diesel vehicles in Delhi which are more than 15 years old. However, still there are no roadmap to deregister and scrap these vehicles, which have been rendered unusable, overnight. NGT also banned sale and registration of all new diesel vehicles in Delhi in December 2015 and later passed an order to reduce the registration period of existing diesel vehicles from 15 years to 10 years in Delhi. Overruling the NGT order of banning sale of all new Diesel vehicles, the Hon’ble Supreme Court in December 2015 itself, banned sale of 2,000 cc and above diesel private cars and SUVs in National Capital Region. However, on the representation of the automobile industry, the ban was removed subject to paying of 1% Environment Protection Charge. A similar case was filed in the circuit bench of NGT in Kochi in early 2016, wherein diesel cars of 2000 cc and above were banned in the State of Kerala, but was subsequently stayed by an order of the Kerala High Court, on the intervention of Toyota Kirloskar Motors and later by SIAM. Environment related cases which have serious bearing on the auto industry, are also being heard at NGT Pune and at Mumbai High Court. A ruling of the Gujarat High Court is still in vogue which has ordered that all vehicles are to be converted to CNG by the year 2021.

        Noise from vehicles and their horns were also cited as one of the nuisances for the society and the NGT, Pune Bench had ordered implementation of an order of the Department of Environment, Government of Maharashtra, which is inconsistent with the technical framework of vehicle manufacturing. However, the same was stayed on the intervention of Maruti Suzuki at the Bombay High Court. Regarding Safety, the High Court of Jabalpur in 2009 had mandated fitment of two protective devices (Saree Guards) on all motorcycles, citing possible entanglement of loose clothes in the wheels. SIAM pleaded the matter in Supreme Court and sought a stay of the High Court Order. In recent past, in 2015, the High Court of Guwahati had banned sales of small cars in Assam, as they were not deemed to be meeting the Crash tests. However, on the intervention of SIAM, the order was modified and registration of small cars was commenced. There are other cases in Guwahati related to vehicle safety, some of which has been transferred to Supreme Court, as these were similar cases especially related to safety of quadricycles, which were being heard in various courts of the country. Presently, all new and old Taxis registered in the country should have a speed limit of not more than 80 km/h. This has been ordered by the Central Government on the directions of the Hon’ble High Court of Karnataka. High Courts of Madras and Bombay are presently hearing petitions against this order of the Central Government.

      • 7. Impact Analysis of Regulatory Policies

        Impact analysis is an important tool to assess the effectiveness and efficacy of regulatory policies formulated by the Government. The impact analysis help in diagnosing the infirmities and gaps in policies and provide opportunity to rectify the same for better outcomes and compliance. An impact analysis of few regulatory policies is discussed hereunder.

        With the implementation of the decadal AMP-2006-16, the growth of automobile sector has been rather impressive despite a slowdown-phase during the implementation of this AMP. The short fall in some the targets of AMP 2006-16 will be make up in the current AMP-2016-2026 with better planning and execution. With the economic growth looking up, the sector is expected to outperform the projections envisaged AMP-2 during the decade of 2016-2026. The automobile sector in India has immense potential for growth and supplement the growth of other related sectors synergistically. For achieving high sustainable growth, the Government of India has not only simplified and streamlined the regulatory policies framework for ease of doing business but also committed for minimum Government and maximum Governance.

        The recent decision of the Government about the leapfrogging to BS-VI norms for all types of vehicles from April 2020 will not only reduce the emission emitted by vehicles but also bring the diesel vehicles and gasoline vehicles at par in terms of emissions discharged by them. However, the actual reduction in the levels of air pollutants in ambient air may not be achieved because of the large number of on-road old and inefficient vehicles. The benefits of this policy cannot be realized unless the inspection & maintenance of in service vehicles, end of life vehicle, dismantling, recycling is implemented across the country. The end-of-life vehicles policy should be given legal force by notifying it under the CMVR, 1988 for boosting the recycling of vehicles in an environmentally sound manner. Further, with tighter emission norms in combination with fuel economy norms will synergistically come down and commensurately reduce the impact on human health and climate change.

        The biggest reform in the taxation regime was rolled out recently in 2017 as unified GST expected to have an overall positive impact on automotive sector. However, the electric cars are levied GST at 12% and hybrid cars at 43% which is not supportive in promoting green vehicles or low carbon transport to improve the air quality and climate targets committed in Paris during the annual conference CoP-15. Further, the recent announcement by the Government for revision of GST Cess from 15% to 25% on SUVs and high-end Sedans may be a dampener for the spirit of automobile sector and may impact the rating of India and cause erosion of trust among the investors and auto-makers. Inconsistency in policy implementation may not only hit long term planning and business strategies but also technology transfer. Therefore, such anomaly should be redressed by the Government in the interest of promoting EVs, human health and climate change.

        Further, despite the new vehicles especially the cars are coming with several safety measures, accident avoidance and accident preventive systems, the accident frequency of vehicles in India is amongst the highest about five lakhs accident reported every year with more than 150,000 deaths. To ensure safe and secure driving on Indian roads, the Government brought a Bill which is pending in the Parliament. The Bill envisages safety measures, stricter penalties and discipline on roads for prevention of road accidents. Presently, the Bill under reference to the Parliamentary Standing Committee of the Parliament for examination. Furthermore, for prevention and control of accident, the Government should implement universally accepted 4 E’s viz. (i) Education; (ii) Enforcement; (iii) Engineering; and (iv) Environment and Emergency care of road accident victims. The disciplined and responsible driving among the drivers and owners of cars can lead safe and secure transportation which can be achieved through effective compliance and enforcement, education, awareness and proper training of drivers of vehicles.

        Additionally, to remain export competitive, the harmonization of international technical regulations is needed because sometime these international technical regulations can be used as export barriers, also referred as Technical Barriers to Trade (TBT). Therefore, the export competitiveness is always in the interest of industry to produce technically sound vehicles aligned with international technical standards. But the fact remains that the transportation in India is unique in terms of diversity, complexity and driving cycle. Therefore, the three wheelers, e-rickshaws, tempos apart from local taxi, minibuses etc. which are crucial part of multimodal transport system in India for short distance journey especially in congested areas and last mile connectivity, provide employment to large number of people and as such should not be put under the rigidity of international technical regulations. This unique India specific transportation needs homegrown solutions.

        Universalization of electric vehicles in the country by 2030 for low carbon economy and transport is gaining momentum through NITI Aayog. However, a radical policy shift to promote 100% EVs in public sector and 40% in private has implications related to affordability, types of energy used, battery technology, charging infrastructure. But it is also fact that the industry has already made a huge investment in efficient gasoline, diesel and hybrid vehicles. The over-dependence and reliance on a single option (viz. EVs) is not in spirit of promoting innovations and out of the box thinking. The process of policy formulation for any sector economy must be technology and fuel neutral provided vehicles meets the regulatory requirements. Further, Government at present is making renewed efforts to implement 5 per cent blending of renewable biofuel in both petrol and diesel. While diesel biofuel blending is near zero, the petrol blending today stands at an overall of about 3 per cent in the form of first generation i.e. molasses-based ethanol. The second and third-generation biofuels are being popularize because of their potential for cheaper, cleaner with high yield fuels derived from non-food biomass, cellulose and algae. The algae are capable of much higher yields with lower resource inputs than other feedstock, algae derived biofuels provide many advantages over other alternate fuels and have promising future. Methanol is also propositioned to be a future fuel by the NITI Aayog.

        The technological advancement in automotive space in India is evolving fast due to development of innovative and converging technological solutions. The ITS-enabled vehicles provide useful information like congestion, fuel consumption, emissions, accident prone areas, traffic flow etc. Further, application of the smart-phones is enlarging the horizon of applications of ITS. The recent advances in convergence of technologies (telematics) like telecommunication, vehicle technologies and ITS are further revolutionizing the performance of vehicles in terms of safety, driving, communication, storage of information for records and analysis of information for rectification and amendments. Currently, the shared, connected and autonomous vehicles are integral part of our priorities for developing affordable EVs. The Google self- driving car has completely changed the thought process of Governments, auto-makers and the public alike.

      • 8. Challenges

        The key policy initiatives like leapfrogging to BS-VI norms, 100% EVs by 2030, GST, ELV policy, methanol economy, fuel efficiency norms, alternate fuels have posed several challenges in terms of technology up-gradation, investment, affordability, implementation etc., before the Government, industry, regulatory bodies, financial institutions. In April 2010 for rolling out BS-III & BS-IV norms, the auto-manufacturers made huge investment for upgrading technology that are compliant with the BS-III & IV norms. The refineries faced an investment and space crisis for up-gradation of their refining operation to meet the requirement of requisite grade of fuel including logistics while ensuring the availability of BS-IV compliant fuel across the country. Now, after 1st April 2020, the BS-VI compliant vehicles which cannot run on inferior quality of fuel, generated a debate on the timely countrywide supply of BS-VI compliant fuel at least twelve to six months in advance before the deadline (April 2020) of implementing BS-VI norms for testing and validation of BS-VI compliant technology in real road conditions before the manufacturing of such vehicles starts from 1st April 2020.

        The proposal for complete electric vehicles is not a panacea for all transport related issues and there are challenges like eco-system functionality and affordability vis-à-vis competing and feasible options available viz. hydrogen fuel cell, methanol, bio-diesel which are economically and ecologically viable. There are also challenges in developing charging infrastructure, lithium mining, low cost battery and disposal of discarded lithium batteries. Therefore, it is best that the Government should not promote any single technology and keep policy formulation for any sector as technology neutral and leave it to the market forces to decide the winners and losers. Further wherever attempts have been made to promote a technology/fuel not based on the market forces, have not achieved the desired results. Hence, the market forces should be allowed to play for deciding the fate of technology or fuel.

        Often, there are also challenges emanating from the judicial pronouncements like the automotive industry has recently faced a ban imposed by the Supreme Court of India on the diesel vehicles (>2000cc) in NCR and subsequent lifting the ban but with the levy of 1% EPC on the cost of the vehicle at the time of registration. There is also continued ambiguity with respect to 1st April 2020 as the manufacturing date or both manufacturing and registration date for BS-VI vehicles. It is mentionable here that automotive industry was made to take overall financial burden of about Rs. 5000 crore because of abrupt ban on the registration of BS-III compliant vehicles due to judicial verdict against the stand of the Government. Such interventions impact not only in financial term but also the growth of the sector, FDI and technology transfer including employment. Therefore, a statement from the Government, clarifying the present nebulousness in manufacturing/registration for BS-VI, is urgently needed to avoid misunderstanding. In future, more challenges are in store for the automotive sector like driver side air bags, fuel efficiency norms for heavy duty vehicles, Real Driving Emissions (RDE), Bus Body Code, Conformity of Production (CoP) for whole vehicles, Restriction of Hazardous Substance (RoHS) Directives, over loading and over speeding etc.

        Presently, the automotive industry is facing challenge of rising input cost, low capacity utilization, price sensitive consumers. In addition, the industry is also not very clear on issues like the End-of- Life of vehicles, 100% EVs by 2030 in public and 40% in private sector, complete methanol economy, other alternate fuels for low carbon transport. Such policy statements reflect instability and unpredictability without any clear and long-term roadmap. The short term, ad-hoc policy measures without a roadmap poses difficulty in implementation and achieving outcome/targets. Further, the regulatory policies should not copy the western countries unmindfully which may not be well-suited to Indian situations, therefore, the policy making should be well informed based on sound reasons and database keeping in view the ground realities.

      • 9. Opportunities and Way Forward

        The transformational regulatory policies in automotive sector have opened a new vista of opportunities to OEMs, auto components and auxiliary entities for developing new ecosystem and adapting to the newer regulatory policies. The paradigm shift in efficient and affordable transportation policies is providing opportunities for cementing new collaborations, partnerships, joint ventures, investments, transfer and development of cutting edge technologies in automobile sector. The new paradigm of low carbon transportation will encourage healthy competition from peers, R&D for innovations and advancement of technology including compliance to the national and international technical regulations to stay relevant and competitive. India’s specific multimode efficient and affordable transportation with low cost technologies, cleaner fuel type will be a win-win situation for all stakeholders including Government, industry, and the people.

        The automotive sector in India has an edge over other countries in terms of requisite manufacturing infrastructure, low cost labour, rising middle class, increasing demand from the Government sector and rural areas which is consistently adding and supporting the growth of automotive sector to newer heights. Focus on the rural demand and adapting to the special needs of low cost and robust vehicles will lead automotive growth, economic development and jobs creation in rural areas which is a priority for the Government. The EVs and low carbon transport shall meet the aspirations of people for safe, secure, affordable and pollution free transportation. India being a vast country has a unique transportation mix not seen across the World viz, three wheelers, e-rickshaws, tempos etc. Therefore, India has a distinctive requirement that requires co-existence of all modes of transport as well as all technologies and fuel types as long as they meet the statutory requirements.

        Many multinational companies are making India as their manufacturing base due to the potential for growth and supporting infrastructure. The automobile manufacturers can achieve higher growth by utilizing the opportunity provided by the AMP 2016-2026 and schemes like Low Carbon Transport Scheme, Green Urban Transport Scheme, Make in India Initiatives and the Faster Adoption and Manufacturing of Electric and Hybrid under the National Electric Mobility Mission 2020 and 100% EVs by 2030. In addition, rapid urbanization, Smart cities programme, availability of raw material, cost effective capital, changing lifestyle etc. provide business supportive milieu and will foster new avenues of growth establishing completely new ventures and start-ups. Further, to galvanize and enthuse the automotive industry and other related institutions, the Government has to ensure consistent and predictable regulatory policy regime with clear roadmaps. The robust and coherent policy framework with roadmaps will leave little scope for judicial intervention like ban imposed by the Supreme Court on the registration of BS-III compliant vehicles after 31st April 2017.

        The proposal of designating a single authority for technical regulations for the automotive industry will further boost the manufacturing environment for vehicles as the regulations then would be more inclusive from the diverse viewpoints of safety, emissions and fuel efficiency, which can often be contradictory to each other. Presently, multiple ministries and authorities are regulating the automotive industry, which tends to bring in a disconnect. There are several examples of overlapping jurisdiction like fuel economy and safety which are interrelated but regulated by different ministries. The overlapping jurisdiction creates confusion and weakens the implementation and outcomes. Therefore, a single implementing authority would make the regulatory environment far more predictable, consistent and systemic, thus enabling the industry to focus on long term investments to make India a world leader as an automotive hub.

      Society of Indian Automobile Manufacturers (SIAM)

      Core 4-B, 5th Floor, India Habitat Centre
      Lodhi Road, New Delhi – 110003, India

      Phone: 91 – 11 – 24647810 -12, 91-11-47103010
      Fax: 91-11-24648222
      Email: siam@siam.in

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