Uncertainty looms large as ministries disagree over proposed tax on diesel cars
Subscribe to NewsletterPlease fill your name and email ID to get our daily auto news mailer.
India's Department of Heavy Industries (DHI) and Ministry of Petroleum are publicly bickering over a steep hike in excise duty levied on diesel-powered cars, a proposal put forward by the latter.
A senior official working for the DHI told a prominent daily newspaper that Union Oil Minister Jaipal Reddy should not have spoken about the taxation policies pertaining to the auto industry since it does not fall under this ambit. This statement came just two days after Reddy proposed a hike of up to Rs. 2.5 lacs on diesel vehicles to the Union Finance Minister Pranab Mukherjee.
The senior DHI official stated, "What right does the oil ministry have to recommend an excise duty increase?" He continued, saying "They should only be bothered with the prices of petrol and diesel. Who will invest in India if such a regressive tax is imposed?"
In his letter to Mukherjee, Reddy has asked the Finance Minister to enforce an additional tax of Rs. 1.7 lacs on small cars fuelled by diesel, while mid-sized diesel sedans should entail a tax of Rs. 2.5 lacs. Currently, the excise duties on cars in India are charged at Rs. 15000 of fixed charge and varying taxes of 12 to 27 per cent, depending on the length of the model as well as the capacity of the engine.
Even the Minister of Heavy Industries, Praful Patel, has appealed to the Finance Minister, speaking against Reddy's proposal. Previously, Patel supported the auto industry when this proposal was being discussed by the government before the 2012 Union Budget. In agreement with the whole auto industry, Patel has recommended that the government should decontrol diesel prices instead of levying extra taxes only on the cars powered by the fuel.
President and Managing Director (M), Ford India, Michael Boneham has stated, "Taxing diesel vehicles more is a very short term solution, if at all. It would be much better if diesel prices are raised and linked to the international prices."
Since the price of petrol was hiked in India by a massive Rs. 6.54 (plus taxes), buyers across the country have shunned petrol cars and are moving towards diesel models. From 38 per cent in 2010-11, the share of diesel cars in the consolidated car sales in India has increased to 48 per cent in the current year. This has, consequently, increased the rate of consumption of the subsidised fuel as well. The government urgently needs to take some measures as the subsidy on the fuel is expected to reach Rs. 1 lac crores in the ongoing fiscal, as compared to Rs. 81,192 crores in the last financial year.
Dear sir, For want every thing please dont blame ANNA team. They are making their effort to make india free of Corruption. Please comment on the concerned issues so that views can be shared by all.Thanking you sir,June 16 , 2012 by Srinivas
I agree with Sam. Now all diesel consumers are enjoying at the cost of price hike burdened on petrol users whenever the Oil Co wish. It leads to a situation that the entire petrol users will switch over to diesel which increase the subsidy bag to many fold. TheGovt. Should have commitment to reduce the subsidy business on diesel. Diesel price should be at par with production output cost. Why the great team anna group have no comments on such issues and build pressure on Govt. The motive is not known ..........June 16 , 2012 by David
Kudos to you Manjunath...!Most specifically on the issue of -"I personally opine that the government is cashing on the situation to swell the coffers so that their inefficiencies and extravagant expenditures can be subsidized."NO BUREAUCRAT OR POLITICIAN WOULD VENTURE DEBATING ON THE AFORESAID EXTREMELY RELEVANT POINT OF NATIONAL CONCERN...!!!Which is why the only banter that is made resonant is that of "subsidy on Fuel specifically Diesel"They want to penalize the struggling Middle Class who's only indulgence is a cost cutting remedy in the purchase of a small Hatch Back Diesel car, whilst our eminent Bureaucrats & Politicos lavish not just themselves but so also their entourage of so called security in Big Buck Diesel Dazzlers and at whose expense...??? NEVER THEIRS AS ITS THE TAX PAYER THAT FUNDS THESE PLAYBOYS WITH THEIR TOYS THROUGH ONE SCAM OR ANOTHER..Is it any wonder then that we have the maximum No. of Rags to Riches story, especially over those that are directly or indirectly related to Politicians & their brood...!!!June 15 , 2012 by Francis
World over the prices of Diesel and Petrol are not widely differing as in India. If this is entirely due to subsidies it is not fair to say that personal diesel cars will increase the deficit largely. Please look at the consumption of Diesel by the Indian Railways, the bus and lorry transports plying on the much touted road network and the Golden Quadrilateral, which was improved only to better the facility of transports of goods and people across India to facilitate trade and commerce. Now if trade and commerce have improved by way of better accessibility to markets and vice versa, it would be a retrograde step to jack up the price of diesel solely on the plea that passenger cars are increasing the deficit as the detrimental effects would be far more than what Mr. Jaipal Reddy can Hhandle or the Finance Minister Mr Pranab Mukherjee can handle. Before any opinion can be formed it would however be prudent for the Petroleum ministry try to accurately assess the consumption pattern before considering any levies or deterrent measures. I personally opine that the government is cashing on the situation to swell the coffers so that their inefficiencies and extravagant expenditures can be subsidised.May I ask a thought provoking question to all the State owned oil companies who claim that their losses are due to the price control- PLEASE COME CLEAN ON THE AMOUNT OF MONEY SPENT ON ADVERTISING- CONSIDER THIS A WASTEFUL EXPENDITURE AS THE OILS AND FUELS WILL SELL WITHOUT ANY ADVERTISING AND YOU WOULD HAVE REDUCED OUTFLOWS AND YOUR MARGINS WILL DEFINITELY IMPROVE ! WHAT ARE THE COST CUTTING MEASURES ADOPTED BY ANY STATE OWNED OIL COMPANIES IN THE LAST FEW YEARS AND WHAT HAVE BEEN THE RESULTS?June 15 , 2012 by Manjunath J
Diesel is a subsidized fuel for the public utility purposes like buses, goods transportation by heavy duty trucks, locomotives, irrigation and other agricultural machinery. If the government continues the present policy of subsidized diesel to be used in luxury cars including 6 cylinder posh cars, all cars in India will gradually change to diesel engines resulting in shortage of diesel. This will increase the deficit in oil pool account and will affect the national economy as 80% of crude oil is imported by India. In developed countries diesel is costlier than petrol because there is no subsidy. India as a developing country will have to continue subsidy on diesel to continue for cheap transportation of goods and to aid agricultural production. The government should act fast and increase either excise duty or add surcharge for fuel subsidy on diesel cars. The decision should be taken fast so that automobile manufacturers will be able to plan and decide production of engines. The decision has unduly delayed and people are eagerly waiting to change petrol cars to diesel cars.June 15 , 2012 by Sam
Comments on this article
- Refreshed Tata Nano to be launched on June 19
- Volkswagen Cross Polo likely to be introduced in August 2013
- Nissan Sunny gets DC Design treatment
- Ford EcoSport automatic to lure Indian women car buyers
- Tata Motors signs MoU with NSDC to offer jobs to Jammu & Kashmir's youth
- SsangYong Motor reports a growth of 25 per cent in May 2013
- Maruti Suzuki likely to introduce a facelift model of Swift hatchback
- Volvo India foresees 4.5 per cent share in luxury car market by 2013 end
14 June 2013, 11:18 IST by CarTrade Editorial Team
Datsun, the completely owned brand of Japanese auto maker Nissan, will be soon launching its new entry level hatchback in the Indian market. Reportedly, the company is all set to make its...
18 June 2013, 11:38 IST by CarTrade Editorial Team
Maruti Suzuki India Limited, the country’s largest passenger car maker, has added a new variant in the line up of Alto 800, named VXi. With a price tag of Rs 3.13 lakh (ex-showroom, Delhi),...
Under: Maruti Suzuki Alto 800
13 June 2013, 11:01 IST by Roger DSouza
The largest utility vehicle manufacturer in India, Mahindra & Mahindra has been making plans to gain a bigger chunk of the fast growing Sports Utility Vehicle (SUV) segment in the market. In...
18 June 2013, 11:04 IST by CarTrade Editorial Team
Maruti Suzuki India Limited, the country's largest passenger car maker, is now offering a discount on its flagship model, Swift diesel, which has been already doing good in numbers. Also, the...
Under: Maruti Suzuki Swift
Refreshed Tata Nano to be launched on June 19
Tata Motors, India's largest auto maker, is all set to introduce a refreshed version of its iconic hatchback Nano in the domestic auto market on June 19, 2013. The reworked model is expected
Volkswagen Cross Polo likely to be introduced in August 2013
Volkswagen, the domestic arm of German auto maker, seems to be preparing for the launch of Cross Polo in the Indian auto market somewhere in August this year. Reportedly, the model has been
Nissan Sunny gets DC Design treatment
Mid-size sedan Nissan Sunny has become the latest car to get a stunning interior makeover by DC Design, India's top luxury automobile design company. The customised Sunny model gets completely
Ford EcoSport automatic to lure Indian women car buyers
Ford India Private Limited, a domestic subsidiary of the American multinational car maker, would soon be luring women buyers with its automatic EcoSport model in the country. The company is
Ford India starts delivering Ford EcoSport to its dealerships
Ford India, the well appreciated American auto maker, has been manufacturing its much awaited compact Sports Utility Vehicle (SUV), EcoSport, at its production line in Chennai. Also, the auto
Ford sees India as its hub for Asia-Pacific region
Ford Motor Company, the well appreciated American auto maker, seems to be preparing for transforming India into its hub in the Asian region. Considering the fact that the Indian auto market is
Ford EcoSport official bookings start at Rs. 50,000
Ford India, the domestic arm of American auto maker, seems all set to offer its much awaited EcoSport compact Sports Utility Vehicle (SUV) to the Indian buyers. The statement is confirmed with the
KTM Duke 390 to be among the most affordable sports bikes in India
Bajaj Auto Limited, one of the country's leading two-wheeler manufacturers, is expected to roll out the KTM Duke 390 sports motorcycle in the domestic market this month. The much hyped naked