In recent years the Government of India has supported the use of Liquified Petrolium Gas (LPG) in public and private vehicles. One of the ways to reduce emission is use of alternative fuels. Among alternative fuels, LPG is one of the most promising mainly because of its low exhaust emissions.The papers about LPG used in three wheeler, cars for SI or CI converted to SI engines had been published extensively in the last two decades. The applications of LPG to bi-fuel or single fuel engines are tried widely at this time. But the extensive study of LPG for small SI single cylinder two stroke engine of three wheeler two stroke engine is not reported in depth.This paper describes development of bi-fuel (LPG/Gasoline) concept of a single air cooled 200 CC single cylinder two stroke engine for three wheeler application. Air cooled SI engine converted to operate on LPG fuel with electronic ignition system and it is having feature to change the spark ignition timing w.r.t. speed and type of fuel selected. Engine compression ratio, ignition timing, spark plug selection, lubrication oil percentage, Cat - Con, LPG I stage and second stage pressure regulators, mixer Venturi size and power screw were also optimized suitable to LPG operation. It was observed that induction system optimization plays important role for meeting the power and Total Hydro Carbon (THC) emission due to scavenging. Engine was optimized with three-way Palladium based catalytic converter (Pd based cat. con instead of Pt based Cat Con) to meet proposed Bharat Stage-III (BS-III) norms. This paper presents some of the experimental results.