The new standards will be phased in over the next seven years, Oil Minister Ram Naik told reporters after a cabinet meeting.

"The investment requirement of the automobile industry is estimated at around 250 billion rupees over this period," Naik said, adding that oil refineries would spend about 300 billion rupees upgrading their fuels.

The new regulations would bring India's automobile industry in line with European standards, Naik said.

However, one environmental group dismissed the new policy as "eyewash" which would not do enough to improve air quality in India's smog-choked cities.

"People of the country have been given no option but to die a slow death, as nothing new is proposed for them," said the Centre For Science and Environment, a private environmental watchdog.

TERRA.WIRE