Diesel Cars Above 2000cc Can Run on Delhi Roads But There’s a Rider

Supreme Court says cars with engine capacity above 2 litres can be registered in Delhi NCR after manufacturers deposit of 1 percent of ex-showroom price of each vehicle.

Traffic moving along a highway passes a Delhi Metro construction site during evening rush hour in Delhi. (Photographer: Prashanth Vishwanathan/Bloomberg.)
Traffic moving along a highway passes a Delhi Metro construction site during evening rush hour in Delhi. (Photographer: Prashanth Vishwanathan/Bloomberg.)

The Supreme Court on Friday lifted the ban on the registration of diesel luxury vehicles and SUVs in the Delhi-National Capital Region conditional on the payment of an environment protection charge by manufacturers.

The apex court said that registrations of vehicles with engine capacity above 2 litres (2000cc) would happen after the deposit of 1 percent of the ex-showroom price of each vehicle as environment cess.

The Solicitor General, speaking on behalf of the Centre, opposed the idea of an environment cess levied by the judiciary and argued that any decision on cess lies with the government.

While conceding that the resumption of sales is a positive, Attorney General Mukul Rohatgi told BloombergQuint in a telephonic interview that the government alone can order levy of cess. “A policy is being framed for phasing out old cars both petrol and diesel,” he added.

Cess Only on Above 2000cc Diesel Cars

The court in its order, clarified that the cess is applicable only on diesel cars with engine capacity of higher than 2000cc and will not apply retrospectively. It also said in the order that the question of environment charge on diesel cars smaller than 2000cc will remain open for consideration.

The ban had affected companies such as Mercedes-Benz, Mahindra and Mahindra Ltd., Tata Motors Ltd. and Toyota.

Mercedes Benz India, Toyota and the manufacturers association – Society of Indian Automobile Manufactures – informed the top court in previous hearings that they are ready to pay 1 percent additional levy if the ban on registration and purchase of above 2,000cc diesel vehicles in Delhi-NCR is lifted.

The Supreme Court has directed all deposits to be made in a nationalised bank in an account to be opened by the Central Pollution Control Board. The money will be kept in the account till further orders from the court.

Senior Advocate Mohan Parasaran, argued on behalf of Mercedes that the auto major will pay 1 percent environment cess to the court if the ban is lifted.

Toyota’s Counsel senior advocate Gopal Subramanium said the company is even willing to pay cess on smaller diesel cars subject to the court’s final decision.

The ban was first imposed by the Supreme Court on December 16 last year.

Firms Cheer Resumption of Sales

While Toyota welcomed the court’s decision but said the 1 percent green cess was unfair. The company will look to pass on the cost to consumers, Shekhar Vishawanathan, Vice Chairman and Whole time Director, Toyota Kirloskar Motors told BloombergQuint in a phone interview.

We have done no wrong, we have not violated any law.Our vehicles continue to be emission efficient, they are among the least polluting vehicles that run on the road and therefore we believe that there should be a longer term view that the government and public should take of the diesel engine technology. In line with some of the court’s observations and our own thinking we will certainly have to pass on this burden. But one must emphasise that this is only an interim measure and I don’t think that this is going to continue in the longer run.
Shekhar Vishawanathan, Vice Chairman and Whole time Director, Toyota Kirloskar Motors

Mahindra and Mahindra told BloombergQuint in an email response that the top court’s order will now allow the company to focus on making its vehicles BS 6 norms compliant.

We are very relieved with the decision of the Honourable Supreme Court today. 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 6 norms by April 2020.
Pawan Goenka, Executive Director, Mahindra & Mahindra

Maruti Chairman RC Bhargava welcomed the court’s decision and said the ban was affecting sentiment among buyers and creating uncertainties about the future of diesel cars.

Industry has been wanting that this ban should go because it was affecting adversely the sentiment of buyers related to diesel and it was creating an uncertainty about the future of diesel cars. What was happening in Delhi was likely to be picked up and repeated in other parts of the country. So all of that used to worry us and thats why we have been arguing that this should go.
RC Bhargava, Chairman, Maruti

Devil in the Diesel?

The Chief Justice of India had on several occasions observed that judges can consider lifting the ban if auto makers readily submit environment cess with the court. He had also observed during several hearings that “diesel is the most polluting form of fuel.”

In the earlier hearing, the Supreme Court bench had indicated before reserving its judgment that they intend to impose this environment cess with an aim to make the consumers aware they are “buying the most polluting car.”

The automobile association SIAM has so far argued in court that diesel is not the most polluting fuel and is 25 percent more fuel efficient compared to other forms like petrol and CNG.