Carmakers in India holding up investments pending government decision on deregulating diesel fuel prices

The Indian government’s indecisiveness regarding its policy on diesel fuel pricing has caused carmakers to withhold investments worth more than US$597.9 million. “Many of our members are still unclear whether they should invest on diesel technology or not in India as there is no clarity on how the fuel will be priced in the future. This has resulted in more than Rs 3,000 crore (US$581.89 million) of investment being held back,” said Vishnu Mathur, director general of the Society of Indian Automobile Manufacturers (SIAM). Mathur said these carmarkers include Maruti Suzuki, Hyundai Motor, Ford, General Motors and Tata Motors. The government deregulated gasoline prices last June 2010. Following the price deregulation, oil marketing companies have adjusted gasoline prices upwards several times, which has led to a widening gap between the prices of gasoline and diesel fuel, which has resulted in greater demand for diesel vehicles. Adding to the government’s indecision regarding diesel pricing policies, some ministries and private sectors have called for the imposition of additional taxes on diesel vehicles. (March 13, 2012)