Union Minister Nitin Gadkari plans to request Finance Minister Nirmala Sitharaman to impose an additional 10 per cent GST on diesel engines and vehicles.
Calling it a ‘pollution tax’, Nitin Gadkari at the 63rd SIAM Annual Convention said it is the only way to reduce the usage of diesel vehicles in the country.
“Request industry to reduce production of diesel vehicles else imposing additional tax will be necessary,” Gadkari said.
“I would urge you to reduce production of diesel vehicles. If you don’t reduce, we have to increase taxes. We will increase taxes so much, you will find it difficult to sell diesel vehicles”, Gadkari said.
He went on to warn that the government will increase taxes so much that it will become difficult for companies to sell diesel vehicles. Reduce diesel vehicle production or else I will increase tax, Gadkari warned.
Gadkari mentioned that he has drafted a letter and intends to meet with Finance Minister Nirmala Sitharaman on Tuesday meeting to request the GST hike.
Sales of diesel vehicles in the Indian market has declined since prices of the fuel was de-regulated in 2014. About 18 per cent of all passenger vehicles sold in the local market run on diesel in the last financial year, from 53 per cent in FY14.
Gadkari said the automobile industry should work on accelerating the transition to electric, bio-fuels to curb vehicular pollution and crude imports.
Gadkari Later Clarifies Statement
However, a few minutes later, Nitin Gadkari issued clarification on his official account at social networking website X, which reads, “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 activelt embrace cleaner and greener alternative fuels. These fuels should be import substitutes, cost-effective, indigenous, and pollution-free.”
Auto Stocks Recover
Shares of Mahindra & Mahindra Ltd (M&M), Maruti Suzuki Ltd, Ashok Leyland Ltd and other makers of diesel vehicles recovered some lost ground after Union Minister Nitin Gadkari said there is no proposal currently under active consideration by the government regarding an additional 10 per cent GST on the sale of diesel vehicles.
M&M, which hit a low of Rs 1,513 earlier today, recovered to Rs 1,546.65 on BSE, but was still down 2.24 per cent. Ashok Leyland was trading at Rs 179.30, down 2.98 per cent. This stock hit a low of 176.90 earlier today. Maruti Suzuki recouped all its losses after hitting a low of Rs 10,396. Tata Motors stood at Rs 621.25, off its day’s low of Rs 615.60. This stock was down 2.12 per cent.
The minister emphasised the growing focus on biofuels and alternative fuels, noting that this is a top priority as India joined the Global Biofuels Alliance during the G20 Summit.
“India imports 89 per cent of crude oil, which is a significant challenge. Therefore, PM Modi has given the highest priority to alternate and biofuels,” added the Union Minister. He reiterated his stance on phasing out diesel engines and stated that it is a hazardous fuel that increases the import bill.
Nitin Gadkari also asked the auto industry why buses and trucks can’t run on ethanol. He also complimented the industry for increasing its focus on alternate fuels and EVs.
SIAM President and the MD-CEO of VE Commercial Vehicles Ltd. Vinod Aggarwal, who also spoke at the event, said, “The auto industry is contributing 6 per cent to GDP and 40 percent to manufacturing GDP. The industry has grown well in the last two years.”
Aggarwal highlighted that there is stress in the entry-level car and two-wheeler segment. The industry is now worth over Rs 12 lakh crore. Growth in the industry can be better if issues at the entry level are sorted out.
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