The last month’s petrol price hike of Rs 7.50 a litre added to the misery of declining petrol cars sales. With an impulsive drift of market towards diesel cars, auto manufacturers were compelled to offer heavy discounts on the diesel trims in order to clear off the stock. As the new word comes from the Finance Ministry, there may be slight rise in demand of petrol cars, but at the cost of losing market of diesel.
In order to gain control of the abrupt shift in market towards diesel cars, the ministry is planning to impose hefty duty on diesel vehicles. As diesel is a subsidized fuel, the finance ministry plans to increase the duty on diesel to suppress the growth in diesel cars on roads and also to increase the revenue.
The chairman of Central Board of Excise and Customs iterated that a proposal has been kept on the table for Finance Minister, Pranab Mukherjee, and is waiting a final word. After the Union Budget in March, an excise duty hike of 2 percent was imposed, which received cold resistance from the auto industry.
Financial experts had predicted a rise in duty on diesel cars after the roller costering price of petrol past month. While several major brands are entering India with a variety of models, the new implied duty could have a trembling effect on the industry. Apart from auto manufacturers, the proposed plan will receive strong opposition from investors as well.