The National Green Tribunal (NGT) order banning diesel vehicle registrations in Delhi may impact India's investment reputation but not substantially improve the city's smog-filled air, according to a report in the Times of India.

According to automobile industry experts, Delhi's 2.7-million-strong car park boasts just 20 percent diesel vehicles or just 500,000 to 600,000 vehicles in all. With the diesel-gasoline price differential coming down, diesel demand has already been in decline in Delhi and pan-India. But the NGT order, said SIAM (Society of Indian Automobile Manufacturers) officials, will simply impact investment in diesel technology without cleaning up the air, according to the report.

SIAM feels this decision will hit companies like Maruti and Honda, which did not traditionally have diesel technology and invested in acquiring it for India, according to the report.

Sources say there are several aspects to the order. First, government fleet isn't overwhelmingly diesel. Government has been sourcing gasoline cars like SX4, Ciaz and Gypsy and even when it comes to largely diesel vehicle companies like Toyota, the government segment is around 10-15 percent only. What the auto industry is complaining about is that orders like this would stigmatize diesel so much that companies will simply not invest in next-generation diesel technology (Euro5 and Euro6 for example), according to the report.

The NGT order has three separate components--no diesel vehicles will be registered till the next hearing; the government will not buy diesel vehicles and will phase out its diesel fleet and diesel vehicles more than 10 years old will not be registered. Industry sources say the last bit on old vehicles is actually an older order but one that authorities have found very difficult to implement, according to the report.