Indian carmakers oppose any move to increase tax on diesel cars

Carmakers in New Delhi are opposing any move by the Indian government to increase tax on diesel cars which is aimed at offsetting the subsidy given to diesel fuels. President of Mahindra & Mahindra’s automotive division, Pawan Goenka, said, “A measure like this would effectively kill diesel automobiles. Diesel vehicles are more dearer than petrol due to their expensive technology. This (higher tax) more or less offsets the gain a diesel vehicle owner makes by buying fuel at a lower price.” He added that decontrolling the price of diesel fuel would be a better way to make car owners pay more. There have been differences within the government regarding the issue. Montek Singh Ahluwalia, deputy chairman of the Planning Commission, is in favor of decontrolling diesel fuel prices. He said, “The present distortion of diesel and petrol prices should be corrected first. Subsidized fuel is not sustainable in the long-term and we need to have rationalization of energy security.” Heavy Industries Minister Praful Patel, on the other hand, is an advocate for subsidies, which he says should continue to fulfill the country’s “social obligation.” In June last year, the government freed petrol prices, but diesel fuel is still subsidized.