Supreme Court Bans Sale of Bharat Stage-III Compliant Vehicles

The Apex Court of India bans BS-III compliant vehicles, beginning from 1^st April, 2017

India: The Indian automobile industry took a shallow turn recently, wherein, it was witnessed that there were around 96,000 unsold BS-III complaint commercial vehicles, 40,000 three-wheelers and 0.671 million two-wheelers in the stock of OEMs, which has been impacted by the verdict of Supreme Court.

Hero Motocorp had over 0.328 million units of BS-III two-wheelers in its inventory, which is projected to be over a worth of about USD185.15 million (INR1,200 crore). The Supreme Court on 29^th March, 2017 issued an order stating that immediately after April 1, 2017 only BS-IV compliant vehicles would be sold by OEMs in the Indian market. This recent order came as an intense tremor to OEMs in the country. The Supreme Court in a statement also commented that the health of citizens in the country is relatively more important than the commercial interests of the OEMs in the region.

On the other end, the manufacturers and dealers of commercial vehicles argued that this notice would lead to an overall loss of around USD1.85 billion (INR12,000 crore).

As per Vikram Kirloskar, Vice Chairman of Toyota Kirloskar Motor, "We are shocked by the judgement. The judgement will come as a big shock to industry." Also, Rajiv Bajaj, Managing Director of Bajaj Auto commented, "We are delighted by the SC order on BS-III vehicle ban. We will be zero BS-111 stock by 1 April in three wheelers. This is the signal that things are changing."

While Environment Pollution Control Authority (EPCA) of India sets to ban the registration of BS-III complaint vehicles after 1 April 2017, it also claimed that the OEMs already have the advance technology of manufacturing vehicles since a long period and should have initiated to phase out the production of BS-III complaint vehicles.

Besides that, the Solicitor General appearing for the Centre, Ranjit Kumar, communicated the Supreme Court that the fuel for BS-IV vehicle is comparatively more cleaner and the oil refineries had already spent around USD4.63 billion (INR30,000 crore) since 2010 for its production.

As per TechSci Research, the recent order passed by the Apex Court of India, has impacted the overall automobile industry of the country, including the growing share of commercial vehicles in the region. Despite of a sudden jump in the sale of vehicles within a time span of three days, the implementation of the order is also estimated to act as a hurdle to the expanding sale of vehicles in the country.

According to a recent report published by TechSci Research, “India Commercial Vehicles Market By Vehicle Type (Light, Medium and Heavy), By End Use Industry (Passenger Transportation, Logistics, Mining, and Construction), Competition Forecast and Opportunities, 2021”, the market of commercial vehicles in India is projected to grow at a CAGR of over 14%, in value terms, during FY2017–FY2022. Rising infrastructure development projects across the country, tentative replacement of old commercial vehicles fleet on account of implementation of stringent emission norms, growing manufacturing and logistics sectors, and increasing focus on tourism and hospitality sector by central and various state governments are few of the major factors projected to propel India commercial vehicles market over the course of next five years.