Who Will Pay? Arbitrary SC Decision Costs Automotive Industry Rs 4,000 Cr

by Swarajya Staff - Aug 30, 2016 01:23 PM +05:30 IST
Who Will Pay? Arbitrary SC Decision Costs Automotive Industry Rs 4,000 CrImage Credit: INDRANIL MUKHERJEE/AFP/Getty Images) 
  • The SC had imposed a ban on the registration of diesel vehicles over 2000 cc engine capacity in the NCR region in 2015.

    Vinod K Dasari, President of Siam, announced at a seminar yesterday that this ban had caused the automotive industry a loss of Rs 4,000 crore.

An automotive industry captain has said that the ban imposed by the Supreme Court (SC) on the registration of diesel vehicles over 2000 cc engine capacity in the National Capital Region (NCR) cost the industry nearly Rs 4,000 crore in eight months.

The Supreme Court had issued the diktat last December (2015) citing the cause of excessive pollution by these vehicles. Earlier this month SC allowed registrations, but also imposed a levy equal to one percent of the ex-showroom price for 2000 cc diesel vehicles.

The apex court had said that:

Diesel vehicles of 2000 cc and above and SUVs are generally used by more affluent sections of our society and because of the higher engine capacity are more prone to cause higher levels of pollution. A ban on registration of such vehicles will not therefore affect the common man.

Vinod K Dasari, President of the Society of Indian Automobile Manufacturers (Siam), who came out with the Rs 4,000 crore loss figure at a seminar yesterday questioned the populist targeting of the automotive industry. According to him, the industry had followed all the laws, and yet the courts arbitrarily banned the registration of a certain segment of vehicles.

Back in December, when the apex court ruling had come out, Swarajya had questioned the manner in which the SC had encroached the executive’s domain:

The problem with this decision is not the intent or the content – all of them can be justified – but the fact that the Supreme Court is muscling into more and more areas of executive action. In the process, it is also becoming a player in the policy-making game, introducing a new uncertainty to the business environment.  

The new uncertainty that the SC had introduced has caused a loss of Rs 4,000 crore to the industry. Isn’t this an example of retrospective policy change and, therefore, grossly unfair? The court could have simply nudged the government to change its policy on certain vehicle segments or introduce a new cess. Instead, it chose to wade into the executive domain and make policy on its own. The cost, if the reported numbers are true, is for all to see.

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