After suffering severe losses for almost 8 months, here is sign of relief for the automakers. Supreme Court has lifted Delhi diesel ban on diesel engine cars with more than 2000cc engine capacity. But, the Delhi diesel ban revoke has a catch, the bigger displacement engine will now be sold with 1% green cess. This 1% tax will be calculated on the ex-showroom price of the vehicle. This 1% tax has to be deposited before the registration of the vehicle and termed as environmental protection charge with no clarity how the government will spend this collected money.
Image Credit: Indianexpress
The reason behind abolition of Delhi diesel ban is the mutual agreement of the automakers to pay 1% extra green cess in exchange of the ban lift. Few days back, Mercedes-Benz India announced to pay the 1% cess for the removal of the ban. In addition to this, other automakers also agreed to pay this tax, stated by a lawyer representing SIAM. Some of the automakers responded to the ban quickly and introduced smaller engine options for their cars. Like Mahindra, who introduced 1.99L engines for XUV500 and Scorpio. Mercedes-Benz India and Mahindra & Mahindra have already indicated that they are comfortable with an additional green cess and are ready to usher BS-VI emission standards quickly.
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Mercedes-Benz is also set to upgrade its entire fleet to BS-VI by 2018 if the fuel quality is improved accordingly as well. Toyota and Mercedes-Benz are the two automakers that have suffered severe losses due to Delhi diesel ban and even termed it as “corporate death penalty”. Due to this both these automaker have even kept their further investment on hold in the country due to slumping sales. The diesel ban was imposed to make the environmental conditions of Delhi a bit better. But now, with an additional tax on these bigger engine displacement vehicles, these vehicles will be seen again on roads and we still don’t know how government will compensate environmental degradation with an additional cess.