Oil refineries would need to invest Rs 40,000 crore (Rs 400 billion) in upgrading the quality of their fuel, while automobile companies would have to spend Rs 25,000 crore (Rs 250 billion) by 2010 to meet automobile emission norms, Union Petroleum and Natural Gas Minister Ram Naik said on Monday at a press conference to announce the National Auto Fuel Policy.

The policy lays down a broad roadmap for achieving various automobile emission standards over a period of time and corresponding fuel quality upgradation requirements.

"While it does not recommend any particular fuel or technology for achieving the desired emission norms, it suggests, taking into account security of supplies and existing logistics perspectives, that liquid fuels should remain the main auto fuels throughout the country and the use of compressed natural gas /liquefied petroleum gas be encouraged in cities affected by higher pollution levels," Naik said.

The policy maps out a stringent framework for the 11 most polluted cities in the country. While vehicles in these cities need to become Euro IV compliant by 2010, the rest of the country needs to achieve only the Euro III emission norms by then.

Also, after April 1, 2007, inter-state buses and trucks not meeting India 2000 emission norms will not be allowed to originate or terminate in Delhi. In 10 other cities the time period for compliance is an year more.

Naik said the policy deviated from the RA Mashelkar Committee recommendations on two counts. One, fiscal concessions like excise duty relief has not been provided for immediately as this proposal will be considered during the Budget.

Also individual ministries will continue to monitor emission standards rather than a National Automobile Pollution and Fuel Authority, as has been recommended by the Mashelkar committee.

"The petroleum ministry will ensure fuel quality while the ministry for road transport and highways will monitor automobile engines specifications. Pollution checks will be the responsibility of the environment ministry," he added.

Diesel cars to be affected most

Reacting to the Auto Fuel Policy, captains of the automobile industry said the impact of the policy would be felt more by companies making diesel vehicles, as most petrol vehicles could upgrade to the new norms with minimal investments.

"I expect the companies making petrol vehicles will not have much problems in meeting the norms," Hyundai Motor India president BVR Subbu said.

"Euro III norms are already operational in some cities and we are meeting those norms," he added.

CSE criticises new policy

The Delhi-based environment watchdog, Centre for Science and Environment, said it found the Auto Fuel Policy unacceptable. CSE had earlier criticised the Mashelkar Committee report.

"The policy, which plays into the hands of polluters, will destroy the Supreme Court's initiative to protect public health," CSE said in a release issued on Monday.

CSE also said the extension of the Euro II norms, currently in place in Delhi, to the rest of the country by 2005 was meaningless, as they have had little impact on the overall air quality in Delhi.