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      Diesel SUVs may become dearer by up to Rs. 50,000

      CarTrade Editorial Team

      CarTrade Editorial Team

      In order to reduce the fuel subsidy burden, a proposal to levy an annual road tax higher by up to Rs. 50,000 on diesel powered SUVs has been made to the Finance Ministry. This was said by former planning commission member Kirit Parikh, who is now head of Integrated Research and Action for Development.

      While this proposal may have been made to reduce fuel consumption, majority of auto makers in the country are of the opinion that the diesel vehicles are more economical and environment friendly and any decision to levy more annual road tax on these vehicles cannot be justified.

      Parikh said that the difference in road taxes on the diesel and petrol versions could be between Rs. 10,000 and Rs. 20,000 and that for the diesel SUVs, it should be higher by up to Rs. 50,000.

      Speaking to reporters on the sidelines of an auto industry event, Parikh said, "Instead of looking at a one-time diesel tax on new purchases, the alternative could be to abolish the existing one-time road tax and make it annual and apply a differential between petrol and diesel vehicles."

      Kirit Parikh was brought in by the Government to make suggestions, in order to curb the mounting fuel subsidy burden. Parikh was of the opinion that the subsidy on diesel should be fixed at Rs. 9 a litre and it should be made market driven. He further added that the proposal has recently been submitted to the Finance Ministry.

      Apart from several auto makers, a large number of car enthusiasts have not welcomed this step. They are of the view that doing so will not help in cutting the fuel consumption. Vikram Kirloskar, Vice-President Society of Indian Automobile Manufacturers (SIAM) and Vice-Chairman of Toyota Kirloskar Motor, said, “Today, 45 per cent of selling price of a vehicle is taxed and any additional tax does not make sense. We do not want diesel vehicles to be over-taxed.” He also said that the auto industry would instead accept market pricing of diesel than to levy an increased road tax.

      Heavy Industries and Public Enterprises Minister Praful Patel, too came out in support of the auto industry and said, “We need to encourage manufacturing in India and diesel is the new technology, which require huge investments and we should not do anything, which will discourage the major investments.”

      If any step to levy higher road taxes on diesel vehicle are imposed, the worst affected would be Mahindra and Mahindra, the SUV king of the Indian roads and Tata Motors. These two auto makers have their largest diesel powered vehicles on the Indian roads.

      On the other hand, this might once again increase the sale of petrol powered vehicles, which this year so far has been largely hit owing to the hike in petrol prices in the country. This has even changed the market trend as car makers were looking forward to bringing more diesel cars. Now, it would be interesting to see what the Finance Ministry decides on the proposal to levy higher road tax on diesel powered vehicles.