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While advanced automotive system assemblies contribute greater value to automobile safety, reliability, emission/noise performance and comfort, they are also generating higher temperatures that can reduce the functionality and reliability of the system over time. Thermal management and proper insulation are extremely important and highly demanding for the functioning of BSVI and RDE vehicles. Frugal engineering is mandatory to develop heat shield in the exhaust system with minimum heat loss. Heat shield design parameters such as insulation material type, insulation material composition, insulation thickness, insulation density, air gap thickness and outer layer material are studied for their influences on skin temperature using mathematical calculation, CFD simulation and measurement. Simulation results are comparable to that of the test results within 10% deviation.