Mahindra chairman reiterates opposition to excise duty hike on diesel cars

Mahindra & Mahindra Chairman Anand Mahindra reiterated his opposition against the proposed excise duty hike on diesel-run vehicles. “We have said this before and will say this strongly. Any duty levied on the point of sale of a product (diesel-run vehicles) to compensate for a distortion upstream is wrong,” Mahindra said.
Earlier in June, Oil Minister S. Jaipal Reddy asked the Finance Ministry to increase the tax on diesel cars by Rs170,000-255,000 (US$3,176- 4,764) to compensate for the subsidy enjoyed by diesel fuel. According to reports by the media, the finance ministry has since asked automakers to submit a report on the impact that an excise duty hike on diesel cars could have over investment in the automobile sector, as well as the sale of petrol-driven cars.
Because of the big difference between the prices of subsidized diesel and petrol, the demand for diesel-powered vehicles has increased considerably; from a mere 20% several years ago, diesel cars now make up about 40% of total sales in India. (August 23, 2012)