Automakers in the country have expressed concerns over the continuing uncertainty over the pricing mechanism of diesel in India and have threatened to withdraw investment plans over the issue.
The government has asked the members of industry body, Society of Indian Automobile Manufacturers (SIAM) to submit new data to determine the demand for diesel vehicles in the country. Auto manufacturers say that they have invested heavily on the diesel vehicle plans and uncertainty will threaten any future investment from the companies.
The government is aiming to check the misuse of diesel subsidies as increasing number of peole are buying vehicles that run on diesel including sports utility vehicles (SUVs). The government is planning to increase prices only for cars and SUVs.
The government is considering imposing higher excise duty on diesel vehicles in the upcoming budget in order to help oil retailers reduce the amount losses incurred while selling diesel at government-controlled rates.
The increase in prices is expected to discourage people from buying diesel power vehicles and stop wealthy SUV owners from taking unfair advantage of subsides. The government might still face a lot of opposition over steps to increase the prices for diesel in any manner. Car makers had strongly opposed the 80,000-rupee duty hike on diesel vehicles in 2010. The union finance ministry is surrenctly studying the proposal to impose higher duties.
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