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BS-VI fuels are set to become more expensive just in time for the new emissions norms to kick in. Amidst all the hype that EVs are creating, petrol, diesel and CNG-fueled vehicles in India are set to move into the cleaner and greener BS-VI emissions norms from April 2020.
In order to meet the new deadline for the BS-VI emissions norms, manufacturers are under pressure and along with manufacturers, oil companies too are under immense pressure. In order for a vehicle to produce BS-VI levels emissions, it should run on more refined fuels and that is what is causing oil companies to worry.
Oil refineries have reportedly spent over Rs 30,000 crore to improve their facilities in order to produce cleaner and more refined fuel. These costs would eventually be passed on to the end user and as expected, oil companies have confirmed the impending price hike.
According to a Hindustan Times report, petrol and diesel prices are set to increase from April 2020 as oil companies will pass on costs of producing BS-VI fuels to the consumer.
The report quoted a senior official from a state-run oil company as saying, "We have made large investments in upgrading to BS-VI and we need to get a return on our investments. This is only logical. The thought process is to recover cost and not profit-making."
The hike could be anywhere between a few paise to Rs 2 per litre. This is not even close to the good news that the automotive industry was looking for. Over the past few months, most automotive companies have reported a decline in sales.
Hence, these companies were looking to the government for relief in terms of reduction in GST. However, there seems to be no relief in sight. The shift to BS-VI emissions norms will also result in the increase of prices of vehicles across all segments.
Be it a commuter motorcycle, a passenger car or a large truck, transitioning to BS-VI is an expensive task. It might be addition of fuel injection, a better exhaust system or the development of an all-new engine. Well, all of these options cost money and buyers will eventually end up paying the price.
Thoughts On BS-VI Petrol & Diesel Prices To Increase Post April 2020
All of the aforementioned factors put together, do not look very great for the development of the Indian auto industry. Manufacturers though are positive about their growth and are investing more into the Indian market. Also, the arrival of new manufacturers gives us hope for the future. However, we will have to wait and watch what happens after April 2020.