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It is barely a month since Akito Tachibana took over as Managing Director of Toyota Kirloskar Motor and he is already concerned about the direction of future investments in India.
This may seem ironical for a country that is growing the fastest in Asia and tipped to become the world’s third largest producer of cars by 2020. The bigger worry for Tachibana is the registration ban on new diesel cars in Delhi with engine capacities of over 2000cc which has been in force since last December.
From Toyota’s point of view, this is a big setback since Delhi is an important market and accounts for nearly eight per cent sales of its top-selling Innova model. Other automakers that have been affected include Mercedes-Benz India and Mahindra & Mahindra.
The Supreme Court had levied the ban on December 16 as part of a drive to reduce vehicular emissions in Delhi. In the process, the message sent out was loud and clear that diesel was the biggest culprit, a charge that automakers vehemently deny.
Future on hold
According to Tachibana, Toyota has been the “most affected” by the court order which has also resulted in the “removal of a level playing field” for automakers. “In this instance, we are being punished despite being compliant with the law and an unfair restriction has been imposed on us,” he says. According to him, dealers have also suffered huge losses while jobs and investments are at stake.
It is in the background of this uncertainty that Tachibana now finds it “extremely difficult to discuss future expansion plans” with Toyota headquarters back in Japan. Growing the India business operations will be a tall order given the “fear or risk of unreasonable restrictions on doing business in India that may be imposed on us suddenly by any statutory authority”.
Clear roadmap, needed
Tachibana reiterates that Toyota is fully compliant with all requirements mandated by Indian laws and is planning long-term investments accordingly. As he explains, the automobile industry works on the basis of long-term planning. “We are agreeable to adopt any policy change if introduced with consultation and a clear roadmap as it recently occurred in adoption of BS VI emission standards,” says Tachibana.
Along with other automakers, Toyota has made representations to the SC stressing that classifying diesel cars at 2000cc engine size for emission levels is not scientific. Their contention is that diesel has a “minimal contribution” to bad air quality and (diesel) vehicles above 2000cc emit less than 0.13 per cent of particulate matter (PM 2.5) in Delhi.
According to carmakers, the best way to reduce emissions from diesel vehicles is to replace older BS I, BS II and BS III vehicles operating on roads in a phased manner. “We are ready to play our role as a strategic partner in such an initiative,” says Tachibana.
The SC is scheduled to hear the case on Monday, May 9, and the automobile industry is hopeful that there will be some positive news this time around. It has been tough going thus far particularly for Toyota and Mercedes which have borne the brunt of the ban.
“We will always remain focused in our efforts to keep minimum impact on the environment. We are aware of the need to improve air quality and every succeeding generation of vehicles that we manufacture incorporates significant improvement in emission standards,” says Tachibana.
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