Automobile manufacturers like Hyundai and Maruti Suzuki have put over Rs. 3,000 crore investments on hold due to the Governments indecision regarding the diesel pricing policy, as per reports of Society of Indian Automobile Manufacturers (SIAM). Vishnu Mathur, Director General, SIAM, said, “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 future. This has resulted in more than Rs 3,000 crore of investment being held back.”
According to Vishnu Mathur, companies like Ford India, Maruti Suzuki, General Motors India, Tata Motors, and Hyundai Motor India have held back investments on diesel engine facility. However, he did not mention the particular amount that was to be invested by each manufacturer.
In November 2011, Hyundai Motor India Ltd. (HMIL) had made announcements regarding a delay in its Rs. 400 crore investment on a diesel engine manufacturing unit. This diesel engine plant was expected to produce 1.5 lac units per year and manufacture three different engines having a capacity of 1.1 litre, 1.4 litre and 1.6 litre for the Indian market only.
India’s largest manufacturer, Maruti Suzuki India (MSI) feels that without a proper policy on diesel pricing and taxes on diesel automobiles, it is going to be tough to invest money in a new plant. As per R C Bhargava, Chairman, Maruti Suzuki India, the indecision regarding the diesel pricing policy has made it difficult for the company to decide whether to invest in a petrol or diesel engine plant.
At the moment, the price of the petrol is deregulated; however, the diesel which enjoys subsidy is still considered by the government. According to the automobile industry in India, diesel tax may be levied in the forthcoming budget as few groups wish to prevent the rich from enjoying the benefits of subsidised fuel.
However, Vishnu Mathur refutes this view as the use of diesel by personal passenger automobiles is lower than 2 per cent. He further adds that the diesel technology has provided excellent fuel economy. The diesel fuel is environment friendly; hence, this step will only harm the diesel technology.
