New Delhi: The National Green Tribunal (NGT) on Thursday slapped a fine of 500 crore on the local unit of carmaker Volkswagen AG (VW) for damaging the environment by using a so-called “cheat device" in its diesel cars sold in India.

A bench headed by NGT chairperson justice Adarsh Kumar Goel increased the earlier penalty amount of 171.34 crore, recommended by an NGT-appointed committee, as a means of “creating deterrence", news agency PTI reported. It directed the German carmaker to deposit the fine within two months.

“Sustainable development is the main guiding factor... We are unable to accept the manufacturer’s objections to the report," the bench said. The Central Pollution Control Board might consider utilizing the money for improving air quality in the National Capital Region and other highly polluted areas, added the bench.

Volkswagen India has maintained that it did not use any “cheat device"—a software that activates the engine’s emissions controls only during laboratory testing. However, in December 2017, it recalled 340,000 vehicles of 13 models with EA 189 diesel engines for technical updates.

The car models that were recalled are VW’s Polo hatchback and Vento, Jetta and Passat sedans; Skoda’s Fabia hatchback, Yeti sport utility vehicle (SUV) and Rapid, Laura and Superb sedans; as well as Audi’s A4 and A6 sedans, besides Q3 and Q5 SUVs.

A VW Group India spokesperson said the company would challenge NGT’s order in the Supreme Court. The spokesperson added that while the firm was awaiting a copy of the order, it reiterated that its cars meet emission norms in India.

In January 2017, Mint cited a senior official from the Automotive Research Association of India (ARAI) as saying that the state-run testing agency found the use of a derivative of VW’s infamous “defeat device" in its cars sold in India.

With NGT’s fine, India joins a select group of countries that has penalized VW in the “dieselgate" scandal, after it admitted in late 2015 that it rigged diesel vehicles to bypass emissions tests in the US, with a potential impact on about 11 million vehicles worldwide. While US authorities have taken $25 billion in fines, penalties and restitution from VW for the 580,000 tainted diesels it sold in the US; in Europe, where the company sold 8 million tainted diesels, only its home country of Germany has so far fined the group over €1 billion. It isn’t clear if VW has paid fines to any other country, except the US.

“With today’s order by the NGT, India has set a strong precedent and also cautions other OEMs (original equipment manufacturers) of strong repercussions in case such an incident recurs," said Sridhar V., partner at Grant Thornton India LLP. “This also shows that regulatory authorities are very serious in enforcing compliance with local environmental laws."

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