New Delhi: The Supreme Court’s decision to reverse its December 2015 order banning the sale of diesel vehicles with an engine capacity of 2000 cc or more in the National Capital Region has upset environmentalists who say the imposition of a compensatory green cess of 1% on the retail price of all diesel vehicles is too paltry to disincentivise their purchase. On its part, the automobile industry has hailed the decision as a step that would now help them focus on bringing in the cleaner Euro 6 norms for all vehicles by 2020.
The Supreme Court order came in a petition filed by luxury car maker Mercedes Benz which had on Monday offered to pay a 1 per cent environment cess while demanding that the ban on registration of vehicles with an engine capacity of 2000 cc or more in Delhi and the NCR be lifted.
The apex court had earlier on July 4 reserved its order on the pleas seeking modification of its earlier ban and had indicated that registration of such vehicles may be resumed on payment of a green cess. In December 2015, the court had temporarily banned the sale of large diesel cars to combat rising pollution in Delhi and surrounding areas.
Its decision came in for severe criticism from the auto industry, which claimed that the order only took into account engine capacity and not the technology in use or the emission levels.
The Centre too appeared to have stood on the side of the automobile industry. When the National Green Tribunal had indicated that it would extend the court’s ban on large engine capacity diesel cars to 11 other cities with high pollution levels, the Ministry of Heavy Industries and Public Enterprises had on May 30 moved the NGT urging it not to do so as that would have an adverse effect on the momentum of growth of the automobile industry.
The ministry contended that the automobile industry is the largest constituent of the manufacturing sector in the country’s economy, contributing more than 47% of the manufacturing GDP of the country, and was the fifth largest recipient sector of foreign direct investment in the country.
It had also contended that any orders restricting the registration or sale of vehicles which comply with all legal norms and standards “would impinge on the rights of the manufacturers to carry on their business lawfully in the country”.
The automobile sector was more vociferous in its protests. Tata-owned luxury carmaker Jaguar Land Rover had claimed that the ban made no sense as the air coming out of the exhausts of its vehicles was far cleaner than what people in and around Delhi were breathing. Its statement was meant to both indicate the quality of air in Delhi and the clean technology being used by it.
Its U.K. based CEO Ralph Speth had thus exclaimed: “If you ban these kind of vehicles, I don’t understand. Sorry, it is over my horizon.”
The world’s largest automaker, Toyota, which sold a number of different large capacity diesel vehicles like Fortuner and Innova in the Delhi NCR had also slammed the order, terming it a “corporate death sentence” and saying it was “the worst advertisement for India”.
Questioning the rationale behind the ban on 2000 cc and above diesel vehicles, Toyota Kirloskar Motor vice-chairman Shekar Viswanathan had asked: ““Does the ban mean that other diesel, petrol and CNG driven vehicles don’t pollute? Why is the ban only on 2,000 cc and above diesel cars and SUVs?” He had also pointed out that loss of business to companies would result in employees getting laid off and dealers suffering from hardships.
A day before the court pronounced its order, Suzuki India chairman R.C. Bhargava – who had earlier termed the ban as “totally arbitrary”, in a message to his company’s shareholders in the Annual Report – also noted that the ban had dented the growth of the Indian auto industry and crimped its job-creation ability. “…Finding the correct solution to any problem requires that the root cause of the problem is correctly diagnosed… Yet, going by what has been happening, cars and especially diesel cars, are being treated as the main villain for our polluted air,” he said in the report.
Mercedes Benz offered to pay a 1% environment cess on the sale of all vehicles over 2000 cc, which is precisely what the apex court ordered. It would also take a call on what cess, if any, needs to be imposed on diesel cars of less than 2000 cc capacity. Incidentally, the Environment Pollution Control Authority had in July recommended a steep pollution tax—22% of the vehicle’s cost – on private diesel cars.
On their part, environmentalists in India insist the Supreme Court’s move to ban diesel vehicles was in the right direction as – in the absence of Euro 6 fuel – even a Euro 6 compliant imported vehicle would emit more pollution in India. As Anumita Roychowdhury of the Centre for Science and Environment had told The Wire in July, cars were the only category of diesel vehicles which have not been acted upon.
She said the Supreme Court had put a temporary ban on diesel cars of 2000 cc engine and above till the time they work out the environmental compensation charge on new diesel cars. Stating that it was important to “control dieselisation” as diesel emissions have been classified by the World Health Organisation as a class 1 carcinogen, with strong links to lung cancer, she had observed that the ban was a step in that direction.
Responding to the lifting of the ban, Roychowdhury said the concession of a one per cent cess was disappointing. “The SC has established the principle that diesel cars are more polluting. But the one per cent cess is not enough. The entire debate is based on the argument that we have to equalise taxes paid for petrol and diesel,” she said.
Questioning the “pay and pollute” logic, advocate Ritwick Dutta said: “What is one per cent on a car worth over Rs 50 lakh? Just Rs 50,000. Once it has been agreed that it (diesel) is a polluting vehicle, then allowing it to ply with a minor cess goes against the grain of the ‘polluter pays’ principle, which is aimed at remedying the damage done and desisting from further harm. This is allowing them to pay and pollute.”