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Jaitley allays diesel ban fears ahead of Suzuki meeting in Japan

Finance minister Arun Jaitley, who is visiting Japan, has played down the ban on new large diesel vehicles in Delhi, saying it is a “transient” phase and India is a market large enough not to adversely affect auto companies.

india Updated: May 30, 2016 20:15 IST
Arun Jaitley,SC bans new diesel cars in Delhi,NGT
India’s finance minister Arun Jaitley and Soft Bank CEO Masayoshi Son in Tokyo on Sunday,May 29, 2016. Jaitley is in Japan on a six-day tour. (PTI)

Large diesel-powered carmakers have no reason to fear a ban on the sale of such vehicles, finance minister Arun Jaitley said on Monday, describing it as a temporary step in a market that was large enough to not hurt the industry.

Jaitley’s comments are seen as seeking to reassure global auto giants after the Supreme Court put a temporary ban last year on the sale of vehicles with engine capacity of higher than two litres to clean up Delhi and its suburbs’ toxic air.

Jaitley meets Osamu Suzuki, the chairman of Suzuki Motor Corp, on Tuesday as part of a six-day visit to Japan to attract investment.

“I think the Indian auto sector is extremely comfortably placed. This is all transient phase which happens and I don’t think that with the kind of large market that Suzuki has, it is in any way likely to be adversely affected,” Jaitley was quoted as saying by news agency Press Trust of India.

Maruti Suzuki is India’s top automaker, accounting for 60% of the petrol vehicle market and 28% of the diesel-powered segment.

The top court has extended twice the ban it first imposed in December. The regulatory uncertainty has sparked fear among carmakers that the court-led initiative could be a precursor to a nationwide ban.

This has prompted companies to consider ways around the hurdle.

For instance, Tata Motors said in April it was reducing the size of its engines to skirt the ban. Mahindra & Mahindra launched 1.99 litre diesel engines in January and is said to be working on developing petrol engines for most of its vehicles.

Automakers have warned that a lack of clarity on when the ban might be lifted could derail a tentative recovery in auto sales, and have called for a comprehensive plan, rather than court-mandated moves, to stabilise the regulatory environment.

But green groups want to extend the ban to smaller diesel cars and other smog-choked cities, and have also urged the court to impose a pollution cess on car sales.

The New Delhi ban is part of a raft of judicial initiatives undertaken to clean up Delhi’s air that is among the filthiest in the world.

First Published: May 30, 2016 13:08 IST