Four years ago, diesel vehicles had a market share of 52 percent in India. Now, that market share has shrunk to 26 percent, as per May 2016. There are multiple reasons and carmakers are beginning to junk their small diesel engine development plans.
One key reason for this new trend is the narrow price difference between petrol and diesel. The other important reason is the lack of a consistent long-time rule. There is another big reason though — BSVI emission norms.
By the year 2020, India will adopt BSVI norms and investments required for diesel engines, especially for small cars is proving to be not feasible, because margins are really low on such cars. New technologies will have to be introduced to meet emission standards, which will increase the overall cost.
Petrol cars are showing a strong comeback, after a time when companies that had strong petrol engines were forced to make diesel engines, like Honda. Also, the latest petrol cars in the market return higher mileage figures of 23 to 25km/l, which are in par with a diesel car's mileage, costing almost a lakh cheaper at the same time.
Also, by the year 2020, carmakers will be investing on newer models, instead of developing and improving the current BSIV engines.