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Contacts
Subrata Ray
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subrata@icraindia.com
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Sruthi Thomas
+91 124 4545 822
sruthi.thomas@icraindia.com
July 2016
Key Highlights
India in the process of implementing tighter emission norms for the entire automobile industry, including two-wheelers
India currently follows BS III emission norms for two-wheelers
From April 2016, all new two-wheeler models would have to comply with BS IV emission norms; the same would be applicable for
existing models from April 2017 on a pan-India basis
In February 2016, the Ministry of Road Transport and Highways (MoRTH) issued a notification under which all automobiles,
including two-wheelers, need to migrate to BS VI emissions norms in 2020, bypassing BS V norms
Tighter emission norms would bring India on par with global emission standards; also mandate use of alternate technologies
Currently, Indian emission norms are adequately stringent as compared to those in other major two-wheeler markets, lagging
behind them only in NOx limits; though the Bharat Stage norms are modelled on Euro norms, the limits on emissions and testing
cycle used are different as compared to Euro norms as it takes Indian driving conditions into consideration
The BS VI norms proposed to be implemented in India in 2020 replicate the Euro V norms, which would be implemented in Europe
at the same time, bringing India on par with European standards
BS VI norms would mandate the use of electronic fuel injection (EFI) systems in two-wheelers, which would replace carburettors
that have significant cost implications for manufacturers as well as consumers
Conclusion
Cost impact of EFI systems on two-wheelers expected to be significant; At the existing levels of localization, there would be a cost
differential of about 10-20% from the existing price of the two-wheeler; costs expected to come down subsequently as parts in the
EFI system get localized
Background
The Indian 2W industry is the largest in the world, with more than 16 million domestic sales annually. Currently, Indian 2Ws are under the BS
III regime, which was implemented in 2010. BS IV emission norms for 2Ws have come into effect for all new 2W models from April 2016, and
would be applicable for all existing 2W models from April 2017. Additionally, the Ministry of Road Transport and Highways (MoRTH) issued a
notification in February 2016 as per which India would be leapfrogging directly from BS IV emission norms to BS VI emission norms in 2020.
The impact of these tighter emission norms on 2Ws in India, in terms of changes in technology and costs is discussed in this note.
INDIAN TWO-WHEELER INDUSTRY
Proposed emission norms for the Indian two-wheeler industry: Key Changes and Impact
ICRA Research Services | July 2016
ICRA RESEARCH SERVICES
ICRA RATING FEATURE
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Exhibit: Timeline of Emission Norm Implementation in India for 2Ws
Source: www.dieselnet.com, ICRA research
Mass
Emission
Norms
1991
Revision of
Mass
Emission
Norms
1996 BS I Norms2000 BS II Norms2005 BS III
Norms2010 BS IV
Norms2017
BS VI
Norms
(Proposed)
2020
Exhibit: Measures Adopted by 2W OEMs to reduce emissions (till BS III)
Source: ICRA research
Changes in Engine
Optimization of Combustion
Chamber and Process
After Treatment Systems
History of Emission Norms in India
Emission standards for 2Ws were first introduced in India in 1991, setting maximum permissible limits for pollutants in the exhaust fumes of automobiles. From 2000, India
has been introducing stricter emission norms for all categories of vehicles, modeled on the European standards or Euro norms. However, with Indian driving conditions and
design requirements having considerable variations with respect to that in Europe, the limits on emissions for 2Ws, and other requirements like the testing cycle have been
different as compared to the Euro norms on which they have been modeled. India is currently in the process of transitioning from BS III norms to BS IV norms for 2Ws, with
the latter coming into effect for new 2W models from April 2016, and for existing 2W models from April 2017. While India had initially planned for the implementation of
BS V and BS VI norms by April 2022 and April 2024 respectively, the government has now decided to advance the nation-wide rollout of BS VI emission norms. As per the
notification issued by the Ministry of Road Transport and Highways (MoRTH) in February 2016, India would be bypassing BS V norms and moving directly to the
implementation of BS VI norms from April 2020 for all vehicle categories, including 2Ws.
While the two-wheeler emission norms introduced prior to 2000 were not very stringent and could be met through engine tuning and optimization, those introduced
subsequently necessitated migration to 4-stroke engines or use of after treatment devices.
With 4-stroke engines providing improved combustion control as compared to 2-stroke
engines, Indian 2W OEMs have migrated to 4-stroke technology, which offers multiple benefits of
reduced hydrocarbon (HC) and particulate matter (PM) emissions as well as lower fuel
consumption. However, nitrogen oxide (NOx) emissions tend to be higher in 4-stroke engines due
to higher combustion temperatures.
OEMs have optimized the combustion process by varying the compression ratio, quantity
of fuel injected, valve timing etc. to reduce emissions from the engine. The OEMs have also
focussed on reducing the friction level in the combustion chamber by use of low mass pistons,
surface coatings on cylinder walls, multi-lip seals and improved grades of lubricating oils.
With more stringent emission norms being implemented, use of after-treatment devices
like catalytic convertors became imperative since BS III norms. Two-way convertors or oxidation
catalytic convertors oxidize only HC and CO, whereas three way catalysts (TWC) reduce NOx as
well.
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Table: Emission standards for 2Ws (gasoline) in India
Year Stage Type CO HC NOx HC+NOx NMHC PM
1991 All 12-30 8-12 - - - -
1996 All 4.5 - - 3.6 - -
2000 BS I All 2.0 - - 2.0 - -
2005 BS II All 1.5 - - 1.5 - -
2010 BS III All 1.0 - - 1.0 - -
2017 BS IV^
Class 1 & 2-1 1.403 - 0.39 0.59-0.79 - -
Class 2-2 1.970 - 0.34 0.47-0.67 - -
Class 3-1 & 3-2 1.970 - 0.20 0.20-0.40 - -
2020 BS VI
SI 1.0 0.1 0.06 - 0.068 0.0045*
CI 0.5 0.1 0.09 - 0.068 0.0045
Note: Figures in g/km; *Only for Gasoline Direct Injection
^BS IV specifies different limits on HC+NOx emissions based on results of evaporative emission
test (SHED) – the lower limits specified in the table are for SHED<6g and upper limits for SHED<2g
Source: www.dieselnet.com, ICRA research
Comparison with Indian Emission Norms in other global Two-Wheeler Markets
The emission norms imposed by India on 2Ws are adequately stringent as compared to other major Asian 2W markets like China, Taiwan and Indonesia, who currently
follow Euro III norms, and lags behind these markets only on the basis of NOx limits. The limits imposed by Euro IV norms on CO and NOx emissions are more stringent as
compared to that in BS IV norms. Amongst other major 2W markets, Taiwan would be shifting to Euro IV norms from 2017 and Euro V norms from 2021.
With the Indian driving conditions and design considerations having considerable variations with respect to that in other markets like Europe, the Indian emission standards
for 2Ws have been very India-specific, with a customized drive cycle (Indian Drive Cycle or IDC) and different limits on the emissions from that adopted in European or
other Asian countries till BS III norms. However, under the BS IV norms which would get implemented in India for all models in April-17 (implemented for new models since
April-16), the Worldwide Harmonized Motorcycle Test Cycle (WMTC) has been adopted as the emission test cycle and the definition of motorcycle classes has also been
modified in line with the UNECE Global Technical Regulation 2 (GTR-2). Thus, India is aligning itself with global emission regulation standards. The BS VI norms proposed to
be implemented in 2020 are largely based on the Euro V norms, which are proposed to be implemented in Europe at the same time. Thus, with BS VI implementation,
Indian emission norms would become at par with its corresponding Euro norms.
The Bharat Stage emission norms have become progressively stringent over the
years; while tighter limits have been imposed on the quantum of pollutants,
the test procedures and classification system employed for 2Ws have also been
reviewed in under BS IV norms. BS IV defines independent limits on NOx
emissions for the first time, which requires manufacturers to adopt technology
that would specifically target NOx emissions, like three-way catalyst systems
and oxygen sensors. Most importantly, BS IV also introduces evaporative
emission standards as well as crankcase emission limits for 2Ws in India, which
requires the adoption of canister technology to control evaporative emissions.
Cost Implications of BS IV emission norms
Our interaction with market participants suggests that the major change in a
2W on migration to BS IV norms would be the inclusion of carbon canisters to
control evaporative emissions. Other changes, like tightening on limits of
different pollutants, would be met through optimization of the combustion
process and increasing the volume and surface area of catalyst used in the catalytic convertor. The cost impact is not expected to be significant, in the range of 2-3% of the
price of the vehicle; however, the same would vary according to the power and displacement of the vehicle.
BS IV norms to BS VI norms – What would be the major changes?
BS VI emission norms incorporate a number of changes from the existing BS IV emission norms to align it with the standards to be adopted in the European Union (Euro V).
Additionally, the limits on emissions from 2Ws have been made more stringent and brought in line with standards for petrol-driven PVs, so that BS VI compliant 2Ws would
be as clean as BS VI compliant petrol PVs in India on a per-kilometre-driven basis.
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Figure: Carburetor vs. EFI System
Source: Bosch Report
Table: Existing price differential between EFI and carburettor variants
Model
Price of
EFI Variant
Price of Carburettor
variant
Hero Glamour Rs. 65,850 Rs. 58,175
TVS Apache Rs. 98,000 Rs. 88,990
Royal Enfield Bullet Rs. 165,000 Rs. 155,000
Yamaha FZ Rs. 80,196 Rs. 74,491
Note: Prices are ex-showroom Delhi as in May 2016
Source: Company websites, ICRA research
BS VI norms would bring in a number of new requirements, with limits on multiple additional pollutants being defined independently. It would be the first standard to
target particulate matter (PM) and non-methane hydrocarbons (NMHC) in the exhaust.
Technology Options for Upgrading to BS VI – Electronic Fuel Injection Systems
As per ICRA’s interaction with industry players, with the upcoming implementation of BS VI emission norms in India, Electronic Fuel Injection (EFI) technology is expected to
be preferred over the existing carburettor technology by two wheeler OEMs in India.
What is EFI technology?
In its simplest form, an EFI system is a computer controlled fuel delivery system. It determines, with the help of some software, the amount of fuel that should be mixed
with air and supplied to the engine.
How is it different from carburettor technology?
The functionality of the EFI system and carburettor is the same – air-fuel mixture management. The
carburettor is a mechanical device, which mixes air and fuel in a pre-determined ratio. This ratio can
be changed manually by means of a screw. On the other hand, in an EFI system, the ratio of air to
fuel that is to be mixed is determined according to the environmental and riding conditions, with
the help of an Electronic Control Unit (ECU) located in the system. This allows for more precise and
dynamic air-fuel mixture management.
What are the components of an EFI system?
An EFI system comprises a number of components which enable it to manage the air-fuel mixture
electronically – (i)sensors (ii)fuel pump (iii)ECU (iv) throttle body (v)fuel map. There are multiple
sensors (RPM, engine temperature, air temperature, throttle position, manifold pressure, crankshaft position), which relay information to the ECU about operating
conditions and load on the engine. The fuel pump in the system directly injects fuel into the combustion chamber using nozzles; it is pressurized to enable atomization of
the fuel, which in turn enables accurate amounts of the fuel to be injected. The fuel map is the inbuilt mapping in the system that enables the ECU to determine the air-fuel
mixture for each combination of inputs. The brain of the system is the ECU – it reads the information relayed by the various sensors located on the vehicle, and the fuel
map programmed in the computer, and determines the quantity of fuel that is to be injected into the
combustion chamber. The throttle body, which replaces the carburettor, is the only mechanical part in
the system.
What would be the cost implications on 2Ws adopting EFI technology?
Our interaction with market participants and the existing cost differential in the market for models
having both EFI and carburettor variants, suggest that the cost impact on 2Ws adopting EFI technology
would be in the range of 10-20% of the cost of the vehicle. Though existing EFI equipped models in the
market have a cost differential of around Rs 6-9,000 with their carburettor equipped counterparts, the
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same would come down to the range of Rs 5–6,000 as parts in the EFI system get localized, and the ancillaries pass on benefits of economies of scale to the OEMs. That
said, the ability of ancillaries to localize the entire EFI system by 2020 remains challenging; hence, cost impact on the vehicle would likely remain on the higher end when BS
VI gets adopted in 2020. Subsequently, localization and corresponding cost reductions would be carried out in a phase wise manner.
Changes in 2Ws with new Emission Norms and Existing Players in the EFI space
Our interaction with market participants suggests that access to technology may not be a major concern. There are a number of well-established international players in EFI
systems like Magnetti Marelli, Bosch, Mikuni and Keihin who have their subsidiaries or joint ventures in India. Given the presence of some of these companies for supplies
to four wheeler OEMs already and expectations of EFIs to be incorporated for future emission norms, the global majors have already started product developments as well
as investments in capacities to be ready to capitalise on these opportunities. For instance, Bosch developed engine management system (EMS) for 2Ws, which includes
components for fuel injection, air management, ignition, exhaust gas treatment and ECUs in 2014 and is in the process of undertaking investments in capacities. Similarly,
Hero MotoCorp Limited set up a 60:40 JV with Magnetti Marelli, namely HMC MM Auto Limited for EFI systems.
Currently, the requirements for the few 2W models equipped with EFI systems in India are met through imports. However, given the scope of volume off-take in the Indian
2W market with the impending implementation of BS VI emission norms, the ancillaries are targeting phased localization of critical parts in the EFI system. Of the various
parts in the EFI system, localization of the throttle body has been identified to be indigenously manufactured over the next 2-3 years, while localization of fuel injectors
would be more challenging and may require higher volumes and is expected only after 2020.
Challenges on migrating to BS VI norms:
Availability of BS VI compliant fuel in a timely manner to carry out necessary testing and validation of the new systems.
Adapting the available technologies in line with operating conditions and requirements of the Indian market.
Cost differential on migration from carburettor to EFI system as a percentage of cost of the vehicle remains high in the range of 10-20% for 2Ws- depending
upon type of engine, its power etc; coupled with costs of modifications in the after treatment system, the customer would be significantly impacted.
With additional components getting integrated into the vehicle, packaging these such that the size and aesthetics of the vehicle is maintained, and rider
ergonomics do not get compromised.
Conclusion
With the tighter emission norms which are getting implemented in India, the country is moving closer towards global emission standards adopted for vehicles. BS IV
emission norms, which get implemented in India for all 2Ws from April 2017, would bring the emission test cycle and categorization of 2Ws used in India at par with that
adopted globally. With further proposed implementation of BS VI emission norms in 2020, Indian emission standards would be brought at par with the Euro emission
standards (Euro V). As many of the other 2W markets adopt the limits imposed under the Euro standards, the implementation of BS VI norms would make Indian 2Ws
compliant with the global emission standards.
The primary change on migration from BS III emission norms to BS IV norms would be with respect to the introduction of evaporative emission limits for 2Ws. To control
evaporative emissions from the vehicle, 2W OEMs require the adoption of carbon canisters in the 2W fuel system, which would trap the fuel vapours escaping from the fuel
tank or carburettor bowl. Other changes, like tightening on limits of different pollutants, would be met through optimization of the combustion process and increasing the
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volume and surface area of catalyst used in the catalytic convertor. The cost impact of these changes on a 2W is expected to be negligible, in the range of 2-3% of the cost
of the vehicle.
On migration to BS VI emission norms, 2W OEMs would be required to adopt Electronic Fuel Injection Systems in place of carburettor for fuel combustion, which would
enable compliance with the tighter emission limits. Additionally, there could be modifications in the storage systems as well as after treatment that would also have
marginal implications on the overall cost of compliance with BSVI norms. While EFI systems have multiple benefits as compared to carburettors like lower emissions, easy
cold starts and longer life for catcons, the high price differential between the two technologies has been constraining the adoption of EFI systems in 2Ws in India. At the
current levels of localization, the cost differential of about 10-15% exists in EFI Vs carburettor variant the two-wheeler. However, given the size of the Indian 2W market,
auto ancillaries are targeting phased localization of critical parts in the EFI system, which would subsequently bring down the cost of EFI systems by FY2021 when BSVI gets
implemented.
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