Car makers vocal against hike in diesel car taxes

Indian auto majors are rebuffed the government’s latest proposal of implementation of additional taxes on vehicles running on heavily subsidized diesel. Auto makers claim that the further rise in diesel tax will adversely affect the growth of the Indian auto industry. 

Currently, there is a proposal from petroleum ministry to Finance Minister, Pranab Mukherjee, in this accord to restrict the demand for diesel from private vehicle owners. Although, no details of the proposal are available it is believed to be similar to the one presented in 2010, recommending the imposition of 80,000 rupees as additional hike. Back then all the auto manufacturers successfully lobbied against it the proposal. 

The Society of Indian Automobile Manufacturers (SIAM) estimates that diesel vehicles consume less than 7 per cent of the fuel's sales of the country, but the government puts consumption at closer to 15 per cent. Executives from Tata Motors, Maruti Suzuki, Mahindra & Mahindra and Ford argued against increasing the excise duty on diesel vehicles at a meeting with finance ministry officials on Wednesday.

The demand for diesel cars in India has surged to more than 40 per cent in March 2012- double the number from the previous year. Also, the hike will affect the investment in the auto sector, as the companies may delay their plans to ramp up diesel car operations in the country.