Last week, we reported about the proposal of hike in excise duty on diesel cars by the Finance Ministry. With the hike of petrol prices, there was a dramatic drift towards the diesel powered cars in the auto market, and since diesel is a subsidized fuel, the government had to take steps to control the unnatural shift. As speculated, there is immense unrest in the Indian auto market with the proposed plan.
Auto majors in the country are showing stern protest against the excise hike on diesel cars. As of now, there no word of confirmation on the proposed plan to Finance Minister, Pranab Mukherjee, but the proposed plan is similar to the one presented in Union Budget 2010 for raising the duty on diesel cars. However, the automakers were able to prevent the passing of the plan back then.
According to reports from Society of Indian Automobile Manufacturers (SIAM), the diesel vehicles consume a very small margin of 7 percent of the entire fuel sale of India, while the government consumes over 15 percent. Executives from Tata Motors, Maruti Suzuki, Mahindra & Mahindra and Ford demonstrated protest against increasing the excise duty on diesel vehicles at a meeting with finance ministry officials on Wednesday.
As fuel prices increasing, the demand for diesel cars has increased to almost 40 percent in comparison to last year. If the proposed plan is passed, it will see several automakers backing out from the Indian market, as they lay bets with cheaper production rate in the country.