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Festive cheer for car makers as diesel ban ends in Capital

Festive cheer for car makers as diesel ban ends in Capital
While experts called it “ineffectual”, the automobile industry found the lifting of ban a “big relief”.
“The ultimate objective is to have an effective deterrent to stop dieselisation of the car segment. So, in any case, the ban was meant to be temporary till the time Environment Compensation Charges were being worked out for cars. There are three elements in the court order. First, the order establishes the principle that diesel vehicles are more polluting and therefore, diesel cars buyers need to pay higher charges. CSE welcomes this. Secondly, the decision to impose higher environment compensation charge on all diesel vehicles is still pending in the Supreme Court. Thirdly, the one per cent cess for 2,000 cc or more engine capacity cars is ineffectual and inconsequential. 

This is not going to make any difference. It is not a deterrent at all to curtail use of diesel cars. Therefore, what CSE advocates is that the court should expedite the larger proposal to impose higher environmental charges, which is pending in the court, on diesels cars as they is more polluting,” said Anumita Roychowdhury, Executive Director, Research and Advocacy of CSE. 

On the other hand Society of Indian Automobile Manufacturers (SIAM), the apex Industry body representing leading vehicle manufacturers in India, said that the order comes as a big relief. 

“The order of the Supreme Court is a big relief for affected companies. However, it is an interim measure till the government of India takes a final decision on need for a cess,” said Vishnu Mathur, Director General of SIAM.

Regulatory uncertainties such as diesel ban and a narrowing price gap between petrol and diesel have driven buyers away from diesel cars and forced manufacturers to offer higher discounts on diesel cars. According to SIAM data, the share of diesel variant in new cars fell to a low of 27 per cent during April-June quarter against 52 per cent four years ago. The court modified its December 16 order despite the Centre’s objection that courts do not have the authority to levy such charges, which is in solely in the domain of the Executive.

The Bench said it was leaving open the question whether the payment of ECC should also apply to the registration of cars with engine capacity less than 2000 CC. It also left open the question whether the rate of ECC should be increased, but said that such an increase, if ever implemented, would not be done retrospectively.

“Let us first get used to one per cent ECC. We do not want the sword of a higher charge hanging over them at this moment,” Chief Justice Thakur said.

Friday’s verdict was based on an appeal by Mercedes-Benz, for whom the Delhi region represents almost a quarter of sales in the country, and an association of auto-makers. Mahindra & Mahindra and Toyota Kirloskar Motor will also gain from the decision. Toyota had described the ban as “a corporate death sentence.” 

The government has argued against the new green cess ordered by the Supreme Court, claiming that only Parliament can approve a new tax. Last month, the top environmental court in India, the National Green Tribunal, ordered authorities to stop all diesel vehicles at least 10 years old from being driven in the Capital. 
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