NEW DELHI The Supreme Court on Wednesday banned the sale of vehicles running on older Euro III fuel technology from April 1, a decision that led to a sharp fall in shares of major automakers sitting on unsold inventories.
Shares of two-wheeler manufacturer Hero MotoCorp fell as much as 4.4 percent, while those of truck manufacturer Ashok Leyland were down as much as 6.6 percent and carmaker Tata Motors' shares dropped nearly 2 percent.
The court, in its judgment, said health concerns of citizens took precedence over any financial losses for companies.
India, in 2015, had said automakers must manufacture only Euro IV-compliant vehicles from April 1, 2017 as they are less polluting, but did not propose banning the sale of older-technology vehicles from the same day.
Currently Euro IV vehicles, locally known as Bharat Stage (BS) IV, are sold in select states, while Euro III vehicles are sold more widely across the country.
There is unsold stock of more than 800,000 BS III-compliant vehicles, mainly two-wheelers, worth about 120 billion rupees ($1.85 billion), Mumbai-based Angel Broking said in a note.
It added that the older technology two-wheeler inventory could be sold in international markets where such vehicles are still permitted.
"Days before the deadline, they said you cannot sell," Vinod Dasari, president of the Society of Indian Automobile Manufacturers (SIAM), and managing director of Ashok Leyland, told television channel BTVi.
"I don't think this much inventory can be sold off in the next couple of days," Dasari said.
($1 = 64.9050 Indian rupees)
(Reporting by Suchitra Mohanty, writing by Aditi Shah; Editing by Sunil Nair)