A proposal by the government to impose higher taxes on diesel run vehicles in the country is being boycotted strongly by the leading car manufacturers in the country. In order to exercise control on increasing usage of subsidised fuel by the car owners, Finance Ministry was considering this move.
Director General, Society of Indian Automobile Manufacturer (SIAM), Vishnu Mathur, said, “It was a consultation meeting regarding the imposition of additional taxes to address the rapid shift in demand in favour of diesel vehicles. All manufacturers were unanimously of the opinion that such a levy would further affect the industry, which has already been struggling with slow sales.”
However, in order to shift the inclination from diesel run cars, the auto industry supported the idea of reducing the difference in the cost of both the fuels. At present, the price difference is going over Rs. 30 a litre as the price for petrol has been revised 6 times during 2011. This has caused the demand curve to shift in favour of diesel cars despite the initial premium of Rs. 80,000 that the customer has to shell out for these cars.
The sales volumes of diesel models accounted for 47 per cent of the total sales in passenger vehicle segment during 2011-12, with an individual growth of 35 per cent. In the same time period, the petrol cars sales went down by 15 per cent. According to an industry official, “Sales are already under pressure due to high interest rates and fuel prices. Consumer sentiment is low. If additional taxes are levied, whatever numbers are coming in will also be affected.”
Industry executives were asked to present data related to status of inventories and sales trends across the last few months in front of the Central Board of Excise and Customs (CBEC) in a meeting held on June 06, 2012. This was an effort in order to better determine the market state. Chairman, CBEC, S.K. Goel, said, “They will come back within a week and we will decide.”
A week ago, Goel had said, “The proposal is there and that is being examined by the finance minister. Consultations are being held and an appropriate decision will be taken by the government in due course.”
President, automotive and farm equipment sectors, Mahindra & Mahindra, Pawan Goenka; Managing Director (MD), India Operations, Tata Motors, P.M. Telang; and MD and Chief Executive Officer, Maruti Suzuki India, Shinzo Nakanishi had a meeting with the Finance Ministry. Others who were present at the meeting were Deputy Managing Director, Commercial, Toyota Kirloskar Motors Shekhar Vishwanathan and Director, Sales and Marketing, Hyundai Motor India, Arvind Saxena. Besides these MD, Ford India, Michael Boneham; Director, Mercedes Benz India, Suhas Kadlaskar; and Vishnu Mathur from SIAM were also present.
