Latest Car News in India

Car makers favor diesel price hike against special tax on diesel cars

At a time when the government mulls over a special tax on diesel cars in India and also wants to curb the rising use of diesel in cars, there is an urgent need of a feasible solution. If it adopts the first option, prices of diesel cars such as Chevrolet Beat Diesel, Mahindra XUV 500 or similar other diesel cars will increase. Similarly, it cannot increase the diesel price suddenly to bridge the gap of around Rs 35-40 between the price of diesel and petrol. It cannot put demarcate differential pricing for cars and other vehicles. It cannot carry on with the subsidy burden increasing on it. Then what is the way out? Is it possible to increase the price of diesel or a special tax on diesel cars will do? The maker of Mercedes Benz C Class has suggested a way out to increase the price of diesel a little bit by Rs 2 to 3 to somewhat ease the pressure on rising subsidy bill.

As per auto industry experts, a diesel price hike will invoke much resentment from transport industry and a truckers strike could ensue leading to disruption of supply of even essential commodities in the country. If it imposes a tax on diesel cars, it will mean that it will kill the industry that is seemingly sick after the recent petrol price hike. On an average diesel cars in every segment will be costly starting from Tata Indica eV2 which is the cheapest diesel car in India to Land Rover Range Rover that is priced at Rs 1 crore plus. It is expected that there will be an increase from Rs 1.5 lakh to Rs 2.5 lakh.

Meanwhile, the ministry has sought suggestions from car makers as well regarding the way out of the situation and Mercedes Benz and Mahindra have favored a diesel price hike rather than taxing diesel cars in India. As per an estimate, the government will be able to collect around Rs 2500 crore to Rs 6000 crore by putting an additional 5 percent tax on diesel cars and by increasing merely Rs 1 on diesel price, it will be able to collect around Rs 6000 crore more. Thus the easiest way out that the car makers have suggested is to increase diesel price rather than the tax on diesel cars.