Supreme Court orders temporary ban on large diesel car sales in Delhi

By Aditi Shah

NEW DELHI (Reuters) - The Supreme Court has ordered a temporary ban on the sale of large diesel cars in Delhi and hiked a levy on trucks entering the city, as the country's highly polluted capital seeks ways to tackle one of its worst-ever bouts of toxic smog.

According to an order passed on Wednesday, the registration of sport-utility vehicles and other diesel cars with an engine capacity of 2,000 cc or more is banned in Delhi and the surrounding region with immediate effect until March 31.

Delhi's crackdown on diesel cars has unsettled investors, dealers and carmakers, who warn the ban could derail a tentative recovery in India's auto sales and worry it could leave them sitting on forecourts packed with unsold cars.

Environmental campaigners and the lawyer who brought the case to the Supreme Court, however, say they plan to see the order extended to other smog-choked Indian cities.

The court - which said the order would not hit India's "common man" - stopped short of banning the smaller cars that clog India's roads. But it did prohibit trucks from transiting through the city to reach other states and banned all trucks over 10 years old from the capital.

An existing charge imposed on trucks making deliveries to Delhi itself was doubled to up to 2,600 rupees ($39).

Other measures include a demand for all taxis in Delhi, mainly those operated by Uber and local rival Ola, to replace diesel with natural gas, as well as a broad, immediate ban on burning solid waste.

In January, the judges will also consider an application to levy a green tax on all diesel cars sold in the country.

Environmentalists have cheered Wednesday's moves but analysts questioned the detail of the ban.

"The (higher truck) levy will just go back to whoever is hiring the trucks. So eventually the consumer ends up paying the levy and inhaling the gas fumes," said Deepesh Rathore, director at consultant Emerging Markets Automotive Advisors.

India's National Green Tribunal, an environmental court, last week ordered a ban on the registration of all diesel vehicles for nearly four weeks to help clean up the air in Delhi, one of the world's most polluted cities.

That triggered a share price fall among automakers which have invested heavily in diesel technology in India. The drop steepened after the Supreme Court's ban.

Mahindra & Mahindra, India's top utility-vehicle maker, was one of the biggest losers with shares down 5.5 percent. It said the ban would affect roughly 2 percent of its total monthly sales.

Rivals such as Toyota Motor Corp, the world's top-selling carmaker, also have popular large cars. Delhi and nearby cities contribute 8 percent of Toyota's sales and 80 percent of vehicles sold in this region are diesel.

(Additional reporting by Sankalp Phartiyal; Writing by Clara Ferreira Marques; Editing by Kenneth Maxwell and Mark Potter)