The Indian government plans to announce a new biofuel policy in January, according to a report by the Business Standard. The policy will reportedly allow automakers to manufacture biofuel vehicles in the country that can run entirely on ethanol. The policy will help the government reduce pollution and also increase ethanol consumption. Union Transport Minister Nitin Gadkari has asked Volkswagen (VW) to make flexi-fuel vehicles, which can run on ethanol but also have a gasoline (petrol) option, for India. Separately, a decision yesterday (16 December) by the Supreme Court of India to ban registrations of diesel vehicles with engines over 2000cc in Delhi until 31 March 2016 will have serious implications for many automakers and demonstrates the lack of a proper legislative road map for emissions in India.
Significance: The biofuel policy will see an increase in production of ethanol once flexi-fuel vehicles are introduced in India. The policy will not only reduce crude oil imports, but will also help address the problem of pollution as ethanol emits less carbon dioxide. Meanwhile, the latest decision by the Supreme Court is a step towards controlling rising air pollution in Delhi, as the judiciary thinks that banning diesel vehicles with engines greater than 2000cc will reduce it significantly. This order could have serious implications for the short- and mid-term planning of OEMs such as Mahindra, Toyota, and Tata, especially given all their investments in recent times to develop new diesel engines, and it could also affect investor sentiment. The order demonstrates the lack of a coherent plan to tackle emissions in India. India needs a clear roadmap to achieve environmentally friendly solutions and a robust policy incentivising the scrapping of older commercial vehicles. The ban on diesel vehicles above 2000cc sold in the National Capital Region (NCR) area could affect around 2,500–3,000 vehicles per month approximately. The order might also prompt other Indian cities that face similar air quality issues to impose similar orders.
