SC verdict does not clear policy haze for auto industry

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The Supreme Court order lifting an eight-month-old ban on sale of big diesel cars in the Capital does not clear the policy haze the industry has been facing since last year.

"I do not know if the Supreme Court can tax goods on the basis of environmental concerns," said R C Bhargava, chairman, Maruti Suzuki.

The court on Friday directed carmakers to deposit one per cent of the price of each vehicle sold that had a diesel engine of 2,000 cc or more in the bank account of the Central Pollution Control Board.

"The finance ministry has to formulate an opinion on this," said Shekhar Viswanathan, vice-chairman and director, Toyota Kirloskar.

Bhargava wondered why the automobile industry was being made to pay the price for pollution. While no Maruti Suzuki car model was affected by the ban, it has faced receding buyer confidence in diesel as a fuel. Most carmakers have invested heavily in recent years to expand diesel engine capacity when demand for such cars was hitting the roof. "Why not a similar cess on power stations, which produce fly ash, or on municipal corporations, which burn waste, or two-wheelers, which pollute more than cars? Why single out one component?" Bhargava added.

"We have accepted the cess because we want to do business, not because our cars are polluting. We urge everybody involved in this process to bring a scientific approach to the assessment of pollution," Viswanathan added. Toyota Kirloskar has suffered a loss of sales of Rs 1,700 crore by the ban imposed in December.

"We, as a voluntary interim measure, offered to pay one per cent of the ex-showroom price of the vehicle towards an anticipated environment compensation charge as a deposit, and not on the premise that our vehicles are polluting the environment," a statement from Mercedes-Benz added.

In June, India's largest luxury carmaker Mercedes-Benz pleaded in court for lifting the ban and, in return, proposed to pay a levy of one per cent of the cost of the vehicle. The proposal was accepted by others automobile makers like Mahindra and Toyota. But companies that can now resume sales in the national capital region said the relief was timely, as dealers could stock cars for the festive season. "I 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," said Pawan Goenka, executive director, Mahindra & Mahindra.