Latest Car News in India

Friday, August 05, 2011

By Pranjal Gera

Government may roll-back subsidy on diesel for car owners

At a time when the demand for diesel run cars shooting upwards and a number of auto biggies gearing-up o launch diesel version of their cars, the government of India has indicated that it might take back the subsidy benefiting diesel car owners. At present, the diesel run passenger cars account for about 15 percent of the total diesel fuel consumption in the Indian market.

While replying on a suggestion in a debate in Lok Sabha, contry’s finance minister Pranab Mukherjee said that the government can accept the opposition’s suggestion on not subsidizing the diesel for the passenger car section.

At present, the government offers a subsidy of Rs 6.08 per litre on diesel. With the price of petrol shooting upwards, the price gap between petrol and diesel has increased substantially, forcing car buyers in the country to choose diesel variants over their petrol counterparts.

The small car segment, which accounts for about 70 percent of the total car sales in the country, is witnessing a steep rise in demand for diesel run cars in recent months. For instance, the diesel version of popular compact hatchback Ford Figo accounts for approximately 60 percent of the total sales of Figo series in the Indian market. The similar trend has been witnessed in the sales of cars like Volkswagen PoloMaruti Swift and Maruti Ritz, where more buyers are opting for diesel versions over petrol one.

Moreover, to capitalize on this growing demand for diesel run cars, many car makers are coming-up with the diesel versions of their petrol run cars such as upcoming Hyundai i10 diesel, Tata Nano diesel, and recently launched Chevrolet Beat Diesel.

As per the government, the consumption of diesel by different sectors in the country is as follows – 37 percent by trucks, 15 per cent by car owners, 12 percent by busses, 12 per cent by the agriculture sector, 10 per cent by industry, 6 per cent by railways and 8 percent for power generation. It is to be mentioned here that India currently imports about 75 percent of its total crude oil requirements.

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