Supreme Court upholds ban on sale of diesel vehicles in Delhi

The Supreme Court today refused to stay a temporary ban on the sale of large diesel cars imposed by the Delhi government, as part of its efforts to bring down the capital's toxic smog and also postponed hearing an appeal by the auto industry on an environmental tax that carmakers say will hit investment.

In fact, the presiding judge said, the court was considering expanding the ban to diesel cars with engine capacity of less than 2,000 cc as well, but, said, it would first seek industry input on the matter.

Delhi's ban on new diesel cars has unsettled the industry and brought uncertainty to its salesmen and investors, who warn the ban and uncertainty surrounding it could derail a tentative recovery in auto sales.

Green groups, on the other hand, want to extend the ban to smaller diesel cars and other smog-choked cities in India.

The apex court was also been expected to rule on a separate green tax on all diesel cars in the city, but has yet to announce its decision on that levy.

A decision on the tax is critical for automakers such as Mahindra & Mahindra, Tata Motors and Toyota Motor Corp that have invested heavily in making fast selling diesel-powered cars for the Indian market.

Delhi is one of the world's most polluted cities, where residents often struggling to breathe easy with one of the worst air quality. Automakers say they want a comprehensive plan - rather than court-led initiatives - to determine the regulatory structure.