The central government is considering imposing higher duty on diesel vehicles after its plans to increase diesel prices met with a stiff opposition in the country.

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.

The petroleum ministry has been urging for higher taxes on diesel cars but the move was opposed by heavy industries ministry. The Kirit Parikh Committee on Energy had recommended that there should be an additional Rs 81,000 equaliser excise tax for small cars with engines of less than 1,400 cc in the 2012-13 budget.