India already has very high tax on fuel - https://www.quora.com/What-is-the-breakdown-of-petrol-price-...

The problem is that a huge percent of the population use two wheelers to get around and any hike in petrol prices will affect them adversely.

That also requires the will to spend the money on offsetting the environmental damage done.

That's technically a separate issue. If you spend the money on hospitals instead then the environment will get worse, but you have the hospitals. You should just try to spend the money wherever it's most effective. If the environment gets worse because of that then whatever you got in exchange must (by definition) more than compensate.

I agree that spending money on the environment is a good idea, but it's still a separate cause. We could spend money on the environment even if we weren't taxing those who harm it.