Gadkari proposes and disposes 10 per cent more tax on diesel vehicles

NEW DELHI: Union Minister for Roads and Transport Nitin Gadkari on Tuesday ignited a sort of panic in the oil and auto industry as he forewarned that, similar to how India overcame industrial opposition to enact tighter fuel emission standards, the government would raise taxes to encourage the abandonment of diesel automobiles.

Speaking at the 63rd annual convention of automobile manufacturers body Society of Indian Automobile Manufacturers (SIAM) Gadkari said, "Today evening, I am scheduled to meet the Union Finance Minister Nirmala Sitharaman. I have already drafted a letter where I have proposed an additional 10 per cent GST on the purchase of diesel cars."

Gadkari said rising pollution level is a serious health concern and there is a case for increasing taxes to dissuade the sale of diesel vehicles and hinted at the prospect of imposing a 10 per cent 'pollution' tax on diesel vehicle sales in the country.

Much to the astonishment of the audience, he then proceeded to warn that taxes on diesel may be increased to such an extent that it would become difficult for auto companies to sell the variants. The statement of the minister was enough to raise an alarm as the industry was not forewarned about any such policy move that would be so abruptly imposed in the government. 

Seeing that his statement had caused much flutter and confusion, Gadkari soon after took to X, formerly known as Twitter, to clarify the government's position that no such proposal was in consideration. 

In a long post, he wrote, "There is an urgent need to clarify media reports suggesting an additional 10% GST on the sale of diesel vehicles. It is essential to clarify that there is no such proposal currently under active consideration by the government. In line with our commitments to achieve Carbon Net Zero by 2070 and to reduce air pollution levels caused by hazardous fuels like diesel, as well as the rapid growth in automobile sales, it is imperative to actively embrace cleaner and greener alternative fuels. These fuels should be import substitutes, cost-effective, indigenous, and pollution-free."

This statement at SIAM of the Union Minister not only fueled a panic sort of reaction among the oil and auto industry sectors it had also impacted the bourses influencing the stocks of these sectors. Shares of auto companies fell sharply and later recovered some lost ground after the minister's tweet. 

In the auto manufacturing sector shares of M&M, Ashok Leyland, Maruti Suzuki and Tata Motors ended low similarly stocks of oil companies like Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation also declined.


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