Future of diesel cars in India under consideration – SIAM expresses concerns

In Delhi, petrol is 43% dearer than diesel. High petrol prices have led to an exodus towards diesel engined vehicles in the past year. In the first half of this financial year, demand for diesel vehicle was up 40% while demand for petrol vehicles fell by 20%. Top Indian automobile manufacturers such as Maruti Suzuki, Hyundai Motors, Honda Cars and Volkswagen have all been considering diesel engine manufacturing units in India to meet this increased demand.

While the automobile industry is revelling in increased demand for diesel powered vehicles, they have been hit by a set of additional levies and taxes which are proposed to be introduced. First a proposal to levy additional annual road tax of upto Rs.50,000 on diesel SUVs while the Supreme Court has imposed environment tax of 25% on diesel vehicles to curb growing levels of pollution in Delhi National Capital Region. This has raised concerns on the auto industry in India which is already in the throes of dipping sales. Diesel vehicle are priced 20-23% higher than petrol variants and once Euro V emission norms come into effect, prices of diesel vehicles will once again rise by Rs.40,000 which will once again cause vehicle manufacturers who are set to invest in diesel capacities in jeopardy.

According to Vishnu Mathur, Director General – Society of Indian Automobile Manufacturers this uncertainty in government policies will cause a strain on automobile manufacturers who are investing heavily in the country. SIAM recently met to discuss the future of diesel in India as part of the Diesel for Future: Economy and Environment, so as to find an amicable solution with inputs from the Indian automobile industry and government.