Friday, March 16, 2012
By Manoj Kumawat
Tax on diesel cars: dilemma ends today, car makers hope it would be averted
Early indications of the Economic survey 2011-12 presented by Union Finance Minister Pranab Mukherjee suggest that the proposed tax on diesel cars might be averted. However, the picture will be clear only after the Budget tabled today in Parliament today. If it is averted, it will be a great breather for the homegrown SUV maker Mahindra that has most of its offerings in diesel. Notably, the car industry has been vociferously opposing the very idea of slapping tax on diesel cars in India.
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Where the Economic Survey thus tabled in the house does not present an inspiring picture of Indian economy, previous experiences tell that not all suggestions in the Survey are implemented in the Budget. And imposing tax on diesel cars could be considered in this category. However, some way or the other, the government would be addressing the issue of loss bearing and increasing subsidy by the government.
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Notably, there are a large number of car makers who have pitched in their tents in India taking in their diesel car offerings. There are lot more cars to come in diesel as well. Some of them which are the most anticipated of all include Ford Ecosport, Maruti Ertiga, Mahindra Xylo and others. In addition to this, Maruti India, that has long been known to produce only petrol cars has also recently shifted its focus on diesel car seeing the trend and craze for diesel cars in India.
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The votaries who oppose the tax on diesel cars propose that diesel consumption by diesel cars is insignificant compared to other sectors such as agriculture and transport in which diesel fuel is consumed heavily. Thus taxing diesel cars to shred off the burden is inappropriate. Ford, Mahindra, Renault and few German car makers are among those who have opposed the proposed move in toto. Furthermore, a lot of proposed plans by the car makers are in balance and will take an ayes only after the government sounds negative on taxing diesel cars.