The recent Supreme Court ruling on lifting its ban on high-end diesel vehicles of engine capacity 2000cc and above has brought back some cheers among the auto majors.
The ban imposed on registration of high-end diesel cars and SUVs having engine capacity of 2000cc and above in Delhi and National Capital Region (NCR) has been lifted by the Supreme Court on condition of payment of one per cent of the ex-showroom price of such vehicles as green cess.
The one per cent amount, charged as environment protection charge, shall be paid with Central Pollution Control Board (CPCB) which will open a separate account with a scheduled public sector bank. The registration of the vehicle would be done by the Regional Transport Officer on the satisfaction that one per cent of the cost of the vehicle has been deposited with the CPCB by the vehicle manufacturers/dealer/sub-dealer.
The ban and Aftermath
The SC ban imposed on December 15, 2015 had adversely affected the automobile industry in Delhi-NCR resulting in a huge production loss and subsequent impact on jobs in the automobile sector. The SC ban was a major setback for auto manufacturers like Mahindra and Mahindra, who majorly sell diesel cars. In order to combat the situation, Mahindra became proactive and came out with a lower capacity diesel engine for the region by introducing a 1.99-litre version of its flagship SUV - the XUV500 and Scorpio. Here the interesting fact is that despite being of lesser cubic capacity, the new 1.99-litre mHawk engine produces the same power output as the 2.2-litre mHawk motor. Mahindra also ventured into petrol space by launching Mahindra KUV100 powered by mFALCON, an all-new engine family with options of both petrol (mFALCON, G80) and diesel (mFALCON, D75). Later, in June, Mahindra launched the NuvoSport range with a 1493 cc mHawk diesel engine.
After the imposition of ban, one of the major hurdles faced by automobile manufacturers was the piling up of stocks. In order to make up the loss, they had to re-route the adding stocks to the markets outside Delhi-NCR.
The Kerala Angle
In May this year in Kerala, the National Green Tribunal Circuit Bench had banned light and heavy diesel vehicles, which are more than 10 years old, in six major cities, including state capital Thiruvananthapuram and commercial capital Kochi. The bench had also directed the state government not to register any diesel vehicle in 2000cc capacity and more, except public transport and local authority vehicles. However, in June, Kerala High Court stayed the
NGT ban. The stay will continue till disposal of petitions filed by Kerala State Road Transport Corporation (KSRTC), Nippon Toyota and others against the NGT orders.
The automobile industry welcomed the Supreme Court decision to lift the ban on registering diesel cars, SUVs and other vehicles with an engine capacity of 2,000 cc and more in Delhi-NCR.
Rakesh Srivastava, Senior Vice President, Sales & Marketing, Hyundai Motor India Ltd commented, “It is a positive step towards addressing the challenges of customers and various stakeholders. To improve investment climate positively is most important, supported by a structured and long roadmap for introduction of technology with a positive tax regime in which implementation of GST will play a key role.”
Dr Pawan Goenka, Executive Director, Mahindra & Mahindra Ltd said, “We are very relieved with the decision of the Honourable Supreme Court. Hope this decision will put all controversy surrounding diesel fuel behind us and we will be able to focus on the more important task of making our vehicles compliant with BS VI norms by April 2020.”
Tom von Bonsdorff, Managing Director, Volvo Auto India, said that the decision of the Supreme Court has come as a big relief for the automobile industry and related stakeholders.
Mercedes-Benz India in a statement said, “Following the court suggestion, we as a voluntary interim measure, offered to pay 1 per cent of the ex-showroom price of the vehicle towards anticipated Environment Compensation Charge as a deposit, and not on the premise that our vehicles are polluting the environment.”
Supporting the decision, Abdul Majeed, Partner, PWC India and an auto expert, said this step alone will not address the emission issue, and holistic solutions need to be figured out by replacing old vehicles on the road.