Auto sector hits SC roadblock

The Supreme Court’s order banning the registration or sale of any BS III vehicles from April 1 is unfortunate. Quite apart from penalizing the automobile industry, the apex court ruling is predicated upon changed goal posts. Auto makers were supposed to stop the manufacture of BS III vehicles from April 1, 2017. But, two days before that deadline, they were told to even stop selling these vehicles. The changing of goal posts does not augur well either for the rule of law or for the business environment in India.

The sentiment that inspired the decision was indeed noble, public health concerns, but these concerns have eclipsed the equally important premise of the rule of law: objectively preexisting parameters to determine the correctness or otherwise of a policy. In this case, auto makers were given to believe that they could legally manufacture BS III vehicles till March 31, 2017. On March 29, however, they were told they have to wind up not only the manufacture but also the sale of such vehicles. So, now after the shock decision, they are left with (as on March 20) 824,275 BS III vehicles, comprising 96,724 commercial vehicles, 671,308 two-wheelers, 40,048 three-wheelers, and 16,198 passenger cars. The total worth is anywhere between Rs 12,000 crore and Rs 15,000 crore. This adversely impacted the stocks of the affected manufacturers.

In January 2015, the government had stipulated that all vehicles should become BS IV compliant. On Monday, it had made it clear that only manufacturing of BS III vehicles would stop March 31, not their sale.

The Indian automobile industry has also been cooperating with the government. Despite its earlier unhappiness over the government’s decision taken last year to leapfrog to BS VI by 2020, it agreed to the shortened span. The automobile industry has had the capability of making BS IV vehicles since 2010, but lack of BS IV fuel prevented it from selling such vehicles nationwide, said Vinod K. Dasari, managing director of Ashok Leyland Ltd and president of the Society of Indian Automobile Manufacturers (Siam). “While no one pushed for BS IV fuel availability for seven years to change over faster, this sudden decision—just a few days before the changeover—is rather unfortunate as it causes undue stress to the entire industry, and causes loss of jobs,” Dasari was quoted saying in Livemint (March 29).

The only people happy with the apex court ruling are environmentalists, whose hostility to commerce and industry has acquired pathological proportions. So Anumita Roychowdhury, executive director at the Delhi-based Centre for Science and Environment, said, “It’s a great victory for public health. We are very happy that the Supreme Court has upheld the principle of public health and Right to Life and established that commercial interest of industry cannot supersede public health concerns.”

As if there commercial interests of industry and public health were mutually exclusive. But it is futile to reason with green terrorists, as they are wedded to their antediluvian, anti-development notions.

It is, however, unfortunate that the highest court of the land has failed to realize that public health is a function of prosperity which, in turn, is the result of economic growth and development. The ban on sale of BS III vehicles has, at the stroke of a pen, will further dampen investor sentiment about India.

Not many businessmen want to invest in a country where the rules of the game can change so abruptly, whether it is by the government derecognizing 86 per cent of the currency or its apex court imposing a decision overnight.