The Delhi diesel ban, which rocked the entire auto industry last December, has now finally been put to rest. To recap, the National Green Tribunal had issued a ban on registration of new diesel vehicles with engines displacing more than 2 litres in Delhi-NCR. The ban was also extended to Kerala (but a stay order put a halt to this) and was also to envelope other states in India. This subsequently led to a drop in sales of diesel vehicles in Delhi-NCR and uncertainty throughout the industry regarding the future of large-capacity diesels in India.
Figures from SIAM show that national sales numbers don't seem directly affected by the Delhi diesel ban, probably as the vehicles involved don't account for large volumes. The mental effect on the industry and the market was quite serious though, and the Delhi-NCR felt it most. As a result, quite a few jobs were lost at the sales level in Delhi-NCR dealerships.
Some manufacturers like Mercedes-Benz, Toyota, Ford and Mahindra were particularly affected as they did not have a sub 2-litre diesel engine to go with their premium offerings. Mahindra managed to find a loophole by downsizing its engine to a cheeky 1.99 litres, although the AWD and AT models of its Scorpio and XUV500 still required the old 2.2-litre diesel. Over the months, many manufacturers held talks with the government on finding a solution, and some even suggested they might withhold further investments in India until a solution was met. Finally
that has happened.
After months of uncertainty and drama, the Supreme Court of India has withdrawn the ban and accepted the manufacturers' plea to add a one per cent environment cess to the ex-showroom price of the car. The ban being called off has come as a relief hugely to not just the aforementioned four manufacturers but the entire industry.
While the others haven't shared their plans yet, Mercedes-Benz has confirmed that it'll bear the additional cost. The authorities originally wanted to levy a massive additional 20-25 per cent green cess, but the final figure was agreed at a much lower one percent levy.
So what happens to all that money, not an insignificant amount when the cars in question cost from tens of lakhs to well over a crore. The environment cess has to be deposited with the Central Pollution Control Board. The CPCB has opened an account with the Union Bank of India in New Delhi. These may be refunded to the manufacturers based on the future course of action decided by the Supreme Court.
But there is some confusion here too. The Government of India has now put in an application to the Supreme Court saying that only the government had the right to levy taxes. The hearing for this is to happen shortly. In the meanwhile, the one percent cess has been renamed to 'environment protection charge'.
When the ban was in effect, several manufacturers started focusing more on petrol engines, and diesels launches were being pushed further forward. Toyota recently launched the 2.7-litre petrol Innova Crysta as the wildly popular diesel-only MPV could not be sold in Delhi-NCR, thanks to its large-capacity diesels. Following Mahindra's lead, Tata is also said to be working towards downsizing its 2.2-litre diesel unit which is currently in use in the Aria and Safari. A test mule of the 1.99-litre Tata Safari was caught testing in Leh recently. A source said that Mahindra and Tata will continue to work on sub-2-litre diesel engines.
Maruti in the meanwhile will concentrate on its upcoming 1.5-litre engine which is expected to be produce same power to other similar capacity engines in its category. The manufacturer is looking to also introduce SHVS to its entire line-up as well. SHVS is classified in the mild hybrid section and hence will be exempt from any sort of ban in the future as well.
We have also heard that manufacturers are planning on bringing postponed diesel vehicle launches back to schedule. This includes Tata with the Hexa crossover and Toyota with the next-gen Fortuner that will use the same engines from the Innova Crysta. Hyundai was earlier considering take a break after the launch of the new Elantra, but the launch of the Tuscon is now back on the cards for this year. Jeephas also brought in its 2.8-litre diesel-powered Wrangler.
While there isbe relief for private car/ SUV manufacturers, the NGT has just stated that the Diesel Ban is still applicable for commercial vehicles. Read all about it here.