Varroc Group made an announcement to invest in the development of electronic fuel injection (EFI) system which are complaint with the upcoming Bharat Stage (BS) VI standard for two wheelers and three wheelers. To reap the market benefits based on the upcoming regulation, Varroc entered into a joint venture with Dellorto, an Italian company, for producing EFI systems and has already won a business contract from a key two-wheeler manufacturer in India. Further, it also plans to produce catalysts in partnership with Heraeus (Germany) to withstand the BS-VI requirements. These catalysts would be offered to the company’s key client—Bajaj—and some other Indian two wheeler manufacturers in the coming future.
Srinath Manda - Associate Director : Automotive & Transportation, at MarketsandMarkets™, shares his Point of View as mentioned below :
Introduction to BS-VI for the two and three wheelers segments
Bharat Stage VI is the most updated version of emission norms for two and three wheelers that will be applicable from April 1, 2020, as per the Automotive Research Association of India (ARAI) publication. The BS-IV standard is the ongoing emission norm for two and three wheelers and as per directives from the Indian Government, the BS-V standard is anticipated to get skipped and will directly enforce the BS-VI standard by the aforementioned timeline. Additionally, ahead of BS-VI standard, the introduction of OBD regulation [Stage I (applicable from April 1, 2020), and Stage II (applicable from April 1, 2023)], which is expected to bring the next level of emission monitoring technologies for these vehicle segments. This OBD-II mandate would bring immense business opportunities for Indian electronic component manufacturers. Moreover, the deployment of BS-VI standard will also depend on the results of the upcoming Lok Sabha elections in 2019.
Readiness of multiple stakeholders for BS-VI
The implementation of BS-VI for two and three wheelers will have a direct impact on three main aspects—fuel, engine manufacturers, and exhaust and after-treatment technology suppliers. This would prompt the players within the ecosystem to improvise or upgrade its existing working model to comply with the requirement of BS-VI standard.
- Readiness of system/component suppliers:
As mentioned earlier, the BS VI standard would impose the suppliers to upgrade its product/system/components to meet the permissible limits of different pollutants such as carbon monoxide (CO), hydro carbons (HC), and nitrogen oxides (NOx) among others. Furthermore, all the vehicle segments need to install EFI systems that would include components such as injector and ECU which boost up the overall cost of the vehicle. It would be a tricky situation in which suppliers need to incur additional costs related to testing, calibration, and validation of new components/ systems, along with constant pressure from OEMs to minimize the cost which deeply affects the supplier’s profit margins.
- Readiness of oil refineries:
The BS-VI will also need to upgrade the petrol and diesel refineries to satisfy the stringent emissions parameters. The fuel requirement for BS-VI complaint vehicles is ultra-clean with low Sulphur content. To achieve the requirement, Indian refineries are undergoing major upgradation of their entire processing plants. The refineries have planned to invest about INR 300 billion to raise the fuel quality from BS-IV to BS-VI. Facilitating the requirement of fuel with low Sulphur content across all the states would be a challenging task considering the limited refineries in India.
Need for EFI system for two and three wheelers
The new BS-VI standard has lowered down the content of multiple pollutants significantly. For instance, a two wheeler [based on positive ignition (PI) engines] does not emit more than 1000, 100, 60, and 4.5 mg/km of CO, HC, NOx, and PM (only for gasoline direct engines) respectively. Alternatively, a three wheeler does not exceed 440, 435, and 130 mg/km [in case of positive ignition (PI) engines], and 220, 200, and 160 mg/km [in case of compression ignition (PI) engines] of CO, HC + NOx, and NOX respectively. These lowered pollutant requirements will be fulfilled by installing electronic EFI systems. This would make the vehicle more agile and responsive coupled with higher fuel efficiency and keep the pollution levels on the lower side. For the Indian suppliers, a large share of two wheelers mainly above 150 cc could be a potential target segment to focus on, not only for complete EFI system, but also at a component level in coming years.
Varroc is a promising supplier in the Indian market and has consistent business ventures with almost all key two wheeler manufacturers such as Hero, Bajaj, Honda, TVS, and Suzuki. As Varroc has recently entered into this segment, injectors, ECUs, and throttle valves are some of the small but important components for EFI systems to start with and extend its customer base—and later on—it can initiate the full-fledge manufacturing of EFI systems for two and three wheelers. Also, post April 1, 2020, after OBD-II regulation (Stage I) becomes applicable, the manufacturing of emission monitoring items such as electrical disconnection of electronic evaporative purge control device, catalytic converter monitoring, EGR system monitoring, and oxygen sensor can be taken into consideration to get benefitted from the BS VI standard.