In a major setback to the Indian automotive industry, Supreme Court has banned sale of Bharat Stage III (BS-III) vehicles after March 31, 2017. The automobile industry has an unsold BS-III vehicles stock of 8.24 lakh units.

Post the announcement shares of India’s largest two-wheeler manufacturer Hero Motocorp shares declined by about 3% and CV manufacturer Ashok Leyland’s shares dipped by 6% from its day’s height.

The Supreme Court hearing mentioned that public health is more important than inventories and the sale and registration of BS-III compliant vehicles will not be permited from 1st April 2017.

According to sources in the auto industry, there are 75,000 unsold BS-III commercial vehicles, 16,000 passenger vehicles, 40,000 three-wheelers and 6.71 lakh two-wheelers. Hero Motocorp has over 3.28 lakh units of BS-III vehicles in its inventory which is estimated to be over 1,200 crore.

President of SIAM and MD of Ashok Leyland told ETNow that its unfair if registration of vehicles is not allowed. He also added that Ashok Leyland will not have any impact on company’s sales and operations.

Earlier, government came out in support of the automakers, requesting the apex court to allow the companies to sell their existing stock of BS-III vehicles even after BS-IV emission norms come into force from April 1.

The industry, on March 27, conveyed to the apex court that technically and financially it was impractical to convert BS III vehicles to BS IV, also that unsold inventories form miniscule part of 19 crore vehicles are already on Indian roads.

Previously, Indian two-wheeler maker Bajaj Auto has also filed intervention plea in the Supreme Court praying that manufacture, sale and even registration of non-BS-IV vehicles be stopped from April 1.

It all started with environmental activist and a lawyer MC Mehta raising the issue of air pollution in Delhi before the Supreme Court.