India Court Lifts New Delhi's Diesel Ban

  • Top court allows diesel vehicle registrations after 1% levy
  • Autos with 2-liter or larger diesel engines banned in December

India’s highest court allowed registrations of large diesel vehicles in New Delhi while introducing a new levy on purchases, lifting a ban automakers including Toyota Motor Corp. and Mahindra & Mahindra Ltd. panned for hurting demand.

A 1 percent levy will have to be paid to register the vehicles in the national capital region of the country, reported BloombergQuint, a partnership between Bloomberg and Quintillion Media in India, citing the decision Friday of the Supreme Court in New Delhi. Mahindra’s Executive Director Pawan Goenka said the automaker is “very relieved,” while Daimler AG’s Mercedes-Benz rejected the levy’s premise that its vehicles pollute the environment.

Although the decision will pave the way for sales of large diesel sedans and sport utility vehicles to resume in one of the country’s biggest auto markets, the additional charge may discourage some buyers. Toyota had said the ban curtailed sales growth, while market leader Maruti Suzuki India Ltd. said it wasn’t in favor of additional levies.

“Hope this decision will put all controversy surrounding diesel fuel behind us,” Mahindra’s Goenka said in a statement. “We will be able to focus on the more important task of making our vehicles compliant with Bharat Stage 6 norms by April 2020.”

Emission Rules

The government in January said it will impose tighter vehicle emissions rules four years early, skipping a transitional step offered in other countries to combat worsening air pollution.

The charge will be on top of fresh levies imposed in the government’s annual budget on new passenger vehicles. The ban on diesel engines 2 liters or larger imposed in December hit sales of some models and prompted the introduction of gasoline variants and smaller diesel engines.

Mahindra has introduced smaller engines for its popular SUVs as well as new compact models with variants powered by gasoline. Local deliveries jumped 13 percent in the April-July period, compared with an 8.5 percent decline in the year-earlier period.

While Toyota’s sales expanded at a slower 1.6 percent pace, its deliveries of Innova multipurpose vehicle have climbed 38 percent with the introduction of a new version in May. The automaker this month started selling a gasoline-powered Innova Crysta.

Mercedes-Benz posted sales of 6,597 units in India in the January-June period, down 0.9 percent from a year earlier, according to statements on its website. The company has the technology to switch its entire fleet to BS 6 by 2018 and said the introduction of compatible fuel will be the “best viable option to curb pollution,” the German automaker said in a statement Friday.

“Lifting of ban on bigger vehicles in the national capital region is a good move because this step alone will not address the emission issue,” Abdul Majeed, partner at Price Waterhouse, said in an e-mailed statement. “We need to figure out holistic solutions in the automotive sector by replacing old vehicles on the road, promoting environment friendly vehicles as well as significantly improving public transport.”

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