Diesel carmakers in a fix due to uncertainty over tax policy

The Indian car market is in a fix because there is no clear news about the possible change that could come in the diesel tax policy. Thus diesel car manufacturers have been forced to put a halt on their future growth plans. The union budget, that will be declared on 16th of March is expected to bring with it an extra levy on diesel cars in India. Even though the popularity of diesel cars is at an all time high, the major car makers are not being able to pick advantage of this situation. As stated by the MD of Renault India, the company is not against changes in tax policy. The only thing they want is a clear indication of likely changes because they have invested huge amount in the market and such uninformed changes in every budget could increase the risk for such diesel car manufacturing companies.

Other leading companies like Maruti India and Hyundai are also worried over this matter. Hyundai has already halted its decision to start a new diesel engine factory in the country for now. Further, the logic behind imposing additional taxes on diesel cars is also being questioned. Diesel cars provide better fuel efficiency and also are more eco friendly but such a move could encourage petrol in place of diesel and as a result the country would be required to pay more for fuel imports. On the other hand, Mr Pawan Goenka, president of M&M believes that imposing diesel tax will not even promote petrol cars, infact it will lead to an overall downfall in the Indian car market.