The country has already adopted CEV stage V over six months, starting January 1, 2025. With the government’s focus on curbing pollution in India, the new emission standards set for construction equipment vehicles (CEVs) can raise the cost of vehicles by 12-15%. ICRA's report states that this cost increase can be passed on to buyers within the next 12-18 months.
The Indian CEV industry, which is observing a rapid growth of 12% in FY2015-FY2024, will undergo a major transformation in terms of quality, technology, safety, and more with the implementation of CEV stage V norms. After the implementation, India will become the third market after the US and EU (European Union) to adopt these new emission standards.
The country has already adopted CEV stage V over six months, starting January 1, 2025. However, it is applicable only to wheeled CEVs and not to non-wheeled equipment (off-road/off-highway equipment). These CEVs constitute 65-70% of the country's overall industry volumes.
A hike in prices for CEVs
This initiative comes at the cost of increasing prices for CEVs by about 12-15% on average which varies on equipment types. ICRA estimates that forthcoming regulatory changes will carry forward the cost to buyers in the upcoming year during the shift from Stage III to V emission standards.
“CEVs’ transitioning from Stage III to V emission standards will entail a higher double-digit impact (12-15%+) vis-à-vis those transitioning from Stage IV to V (4-6%),” stated ICRA’s report.
Structural dynamics
Major structural changes in the design for equipment to incorporate safety features like –ROPS, TOPS, FOPS, etc. will increase the price.
The new standards will also accommodate a wider range of engines, including those smaller than 37 kW and those larger than 560 kW, and tighten/introduce particulate matter (PM)/Particle number (PN) emission limits, respectively.
Along with this, multiple safety requirements, as mentioned in Automotive Industry Standard (AIS)-160, and more stringent noise levels for operators and pass-by, will lead to cost increases.
“The regulatory burden of the Stage V program will be greater for manufacturers who did not include filters in Stage IV engine designs,” the report added.
Though the projection is expecting a lag for the pre-buying of CEV in Q1 FY26, the volume growth has growth potential with a short-term impact on CEV affordability.
