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Letter from Mumbai: Non-registration of high-end diesel cars

Letter from Mumbai: Non-registration of high-end diesel cars

A TEMPORARY ban imposed by the Supreme Court on the registration of high-end diesel cars and SUVs in Delhi and the National Capital Region has shaken the automobile industry and led to heated arguments over the merits or demerits of the fuel.

Responding to a plea by environmentalists citing high atmospheric pollution in the National Capital Region (NCR), the apex court earlier this year imposed a temporary ban on the registration of cars with diesel engines above 2,000cc capacity. The court, which has taken a stern view of the damage to the environment, caused allegedly by diesel, extended the ban till April 30.

But during court hearings, the Supreme Court judges were critical of the automobile industry for trying to pitch for diesel. When leading automakers including Toyota, Mercedes-Benz and Mahindra claimed that diesel was far less polluting, the judges sarcastically asked their lawyers whether their engines were emitting oxygen.

Environmental activists are seeking a green tax of 30pc on diesel vehicles. Last month, at a Right to Clean Air conclave organised by the Centre for Science and Environment, leading activists demanded the imposition of the green tax.

Experts from the International Council on Clean Transportation (ICCT), which exposed the ‘cheating’ scandal involving European automaker Volkswagen — it had allegedly implanted cheating devices in its cars to fudge emission levels, and is now facing massive law suits in many parts of the world — also slammed the automobile industry at the conclave.

The ICCT produced reports by the Canadian government on the harmful effects of diesel on humans; the fuel can lead to a whole range of diseases from cancers of the lung and bladder, to respiratory, cardiovascular and immunological ailments, the experts said.

But the powerful auto industry in India — which includes all the top American, Japanese, Korean and European manufacturers, besides domestic giants — has been stoutly defending the fuel.

Last week, even the Japanese ambassador to India stepped in and backed diesel. “Diesel is 20pc more efficient that petrol,” said Kenji Hiramatsu, the Japanese envoy. “It has less emission because of this.”

Hiramatsu was speaking at the inauguration of an Isuzu plant in the southern state of Andhra Pradesh. Hitoshi Kono, deputy managing director, Isuzu Motors India, backed the Japanese ambassador. “It is wrong to say that diesel is environmentally harmful,” said Kono. Diesel delivers 25-30pc more mileage, and 25-30pc less emission than petrol.”

Auto executives like Kono claim that the Supreme Court’s ban on the sale of new diesel vehicles of above 2,000cc will further add to pollution levels as only older and inefficient cars will be on the roads.

Carmakers have expressed willingness to introduce even more efficient engines that will be compatible to Bharat Stage VI (which corresponds to Euro-VI norms) standards. However, the auto industry claims that India’s oil refiners are not geared to produce such fuel at present.

Kono pointed out that it was not easy for automakers to change their plans midway. “It is not easy to shift products as vehicle development takes time,” he said. “Please do not change any policy overnight. We are hopeful that the Indian government will take the right decision.”

OTHER automobile manufacturers have also been equally critical of the decision to temporarily ban registration of high-end diesel vehicles in Delhi and the NCR, which is a major market for such vehicles.

R.C. Bhargava, an auto industry veteran and chairman of Maruti Suzuki, described the temporary ban as ‘arbitrary’ and claimed that the auto industry was being made a scapegoat in the name of environment.

According to him, diesel cars and SUVs contribute a mere 2pc to atmospheric pollution, while other vehicles — including two-wheelers and trucks — contribute between three to nearly five times to pollution.

The apex court should initiate action against older vehicles, especially pre-BS ones, which emit nearly six times more pollutants than new cars, he says.

The auto industry claims that vehicles contribute minimally to pollution in Delhi and the NCR, whereas the hundreds of thousands of diesel generators — which are operated by retailers and shopkeepers as a backup in a region plagued with power cuts — contribute much more to pollution.

The Delhi government, in response to the high pollution levels in the national capital during the winter months, had introduced an odd-even car registration rationing scheme in the first fortnight of the year. Cars with odd numbers could be driven on odd days, and even-numbered cars on other days.

The Aam Aadmi Party (AAP) government in Delhi reintroduced the scheme in the second half of April, but the response has been mixed. The Delhi government is now seriously considering extending it on a longer term basis.

Though the sale of diesel vehicles has been impacted because of the temporary ban in Delhi, automakers have not scaled down on their investment plans. Toyota Motors, for instance, is investing Rs11bn in a new diesel engine plant in Bengaluru. The plant will produce more than 100,000 diesel engines every year.

The engines to be produced at the plant will comply with BS-4 (Euro-4) emission standards and can be upgraded to BS-5 and BS-6 norms as well. This is the first diesel engine plant being set up by Toyota in India.

The Supreme Court ban has affected sales of its SUVs including the Innova and Fortuner. Toyota has recently announced the launch of a petrol version of the Innova, called the Crysta, to tackle the ban on diesel engines above 2,000 cc in Delhi and NCR.

Domestic auto giant Mahindra & Mahindra, which has a large number of diesel models, came out with a unique solution to overcome the ban. It launched a new variant for its Scorpio and XUV 500 models, with a 1.99litre diesel engine.

Other automakers are tweaking their products, introducing compressed natural gas (CNG) engines or even those that can run on bio-diesel. Mercedes-Benz, for instance, has offered to introduce 100pc bio-diesel cars in India.

Nitin Gadkari, the road transport minister, said the German luxury carmaker had written to the government offering to replace diesel with bio-diesel. Roland Folger, managing director, Mercedes-Benz India, has also been critical of the Supreme Court stance.

According to him, all Mercedes cars sold in India are emission-compliant, yet it has to suffer because of the ban imposed in Delhi. “This frustrates us,” said Folger.

Many of the top international carmakers including Toyota and Mercedes-Benz have said they may have to reconsider their investment plans in India if the ban on high-end diesel cars becomes permanent.

Published in Dawn, Business & Finance weekly, May 2nd, 2016

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