Auto fuel policy to fuel emission control catalyst demand in India

The emission norms in India are likely to get stringent with government working on a new auto fuel policy, which may be introduced in the next few years. The policy is expected to be in line with changing emission norms and in compliance with fuel standards of Euro 5 and 6 norms globally.
 
Though the policy sounds good to tackle long-term emission challenges in the country, experts believe the implementation will not be a cake walk. Take for example the implementation of Bharat Stage-IV (India’s equivalent to Euro 4) norms which came into effect from April 1, 2010, in 13 cities. Although, the government aims to bring over 50 cities by 2015 for using cleaner petrol and diesel, only about 22 cities have BS-IV fuel availability at present – much below the target.
 
While the blame game continues among the stakeholders – oil and auto companies – for the delay in implementation of the BS-IV norms, one thing is for sure, be ready to embrace stricter emission norms in future. This is likely to spur the demand for emission control catalyst market. “The demand for emission control catalysts in India is being driven by the increasing awareness across stakeholders and India’s mission towards emission reduction,” said Chaitra Narayan, Associate Director, Chemicals, Materials & Foods Practice, Frost & Sullivan.
 
According to a report of Transparency Market Research, environmental catalysts are witnessing high demand globally with various regulations being introduced by different countries for effective emission control to safeguard the eco system. In India, automotives such as trucks do not require catalysts under the BS III norms prevailing across a large part of the country at present. But, things will change when the BS IV norms become mandatory in 2015.
 
A missed opportunity?
As per the Frost & Sullivan report, Global Market for Emission Control Catalysts, the market earned revenue of more than $ 6.70 billion in 2012 and estimates this to reach $ 14.22 billion in 2019 - with Asian countries' adoption of Euro standards further fuelling market growth. However, according to Frost & Sullivan, the relaxed enforcement of emission regulations, especially in China and India, has dissuaded potential investors from taking advantage of Asia-Pacific’s potential opportunities, restraining overall market value.
 
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Experts believe the market for emission control catalysts in India, though nascent at present, is likely to witness high growth rate in near future. “Asia Pacific region forms about 30 percent of the total global market of $6.70 billion in 2012. At present, India forms a very small market for emission control catalysts. But, with anticipated increase in the number of cities covered and vehicles covered by the Bharat Stage IV (BS IV) emission control norms, the market is expected to grow at a rate of around 15-20 percent by 2015,” said Narayan.
 
Raw material supply, a constrain
Frost & Sullivan report also identified high and volatile prices of platinum group metals (PGM) as major challenge before catalyst manufacturers, who are forced to reduce PGM quantities, in turn, affecting system performance. “PGM formed about 56 percent of global usage of platinum, palladium and rhodium put together, with light duty diesel vehicles being the highest consumer of PGM catalyst. In order the tackle the price variations in precious metals, catalyst manufacturers in general have started charging separately for the base substrate (generic chemical) and the core (precious metal) based on prevailing prices at that point in time,” added Narayan.
 
Ramping up production
Johnson Matthey Plc, BASF, Umicore, etc are some of the major global players in emission control catalyst market, who have significant presence in India as well. Anticipating a rise in demand for vehicles adhering to new emission norms, emission control catalyst manufacturers in India are building up capacities. “Yes, we do see expansions occurring in India. For example, the announcement by BASF in Q4 of 2012 to start a greenfield plant for emission control catalysts in India and their plan to increase capability to address the truck market,” added Narayan.
 
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BASF India Ltd is reportedly looking to set up a greenfield facility in Chennai by 2015 to address the growing demand for emission control catalysts for the automotive sector. BASF was addressing emission control catalysts market for cars and two-wheelers and now aims to tap the anticipated growth from the trucks segment, which is expected to be brought under the emission control measures with more cities coming under the radar of the BS IV norms.
 
Though the auto segment is witnessing its slowest growth in last few months, the sector is expected to see investments in the long run. This, along with the government initiatives to implement stringent vehicle emission norms, is likely to fuel the demand for emission control catalysts in the country in the coming years.