India's Union finance ministry 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.

According to estimates, the oil retailers in India will suffer a loss of about Rs. 82,000 crore in 2011-12 from selling diesel. The petroleum ministry is also looking into ways for reducing the use of subsidized fuel in cars and has recommended higher duty on the purchase of diesel cars to the finance ministry.

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.

Meanwhile, the Centre for Science and Environment has recommended imposition of an additional duty of up to Rs 162,000 on big diesel cars in the country in order to avoid the misuse of diesel subsidies bourn by the government.

The non-government organization blamed the government for no taking action to check the misuse of diesel subsidies and also criticized the auto industry body Society of Indian Automobile Manufacturers (SIAM) and vehicle manufacturers for spreading wrongful information about diesel technology and level of fuel consumption.

The NGO is aiming to stop the misuse of subsidies fuel for luxury. CSE Executive Director of Research and Advocacy and the Head for Air Pollution and Urban Mobility, Anumita Roychowdhury said that all cars are luxury ad thus car owners should not received subsidized fuel.

Diesel is the most consumed fuel in the country and it is sold at a discounted price that is lower than its actual import price.