Mar 09, 2012 at 01:32pm IST

Ford, Renault oppose additional duty on diesel cars

New Delhi: Ahead of presentation of Budget for 2012-13, automobile makers like Ford and Renault are raising their voice against imposition of any additional duty on diesel vehicles that has been demanded by many quarters.

As the government gets ready with the Budget, there has been speculation that higher taxes could be imposed on diesel passenger vehicles as the subsidised fuel has been diverted for personal use by the affluent.

"How can you justify taxing only one industry? It is not justified. The automobile industry is the one, which is investing heavily in the country. It is going to affect the industry negatively," Ford India President and MD Michael Boneham told reporters in New Delhi.

Ford, Renault oppose additional duty on diesel cars

There has been speculation that higher taxes could be imposed on diesel passenger vehicles in the Budget.

Ford India, which is investing Rs 4,000 crore in Gujarat to set up a new plant, also supports stand taken by the Society of Indian Automobile Manufacturers (SIAM) on the diesel taxation issue, he added.

"Only about 1 per cent of the total diesel consumptions are by personal cars. So I think, it is not a revenue generating step," Boneham said.

Expressing similar sentiments, Renault India Managing Director Marc Nassif said the company in association with its alliance Nissan has invested Rs 4,500 crore at its Chennai facility and its investments may be at risk if the government suddenly changes its policy.

"A significant part of the product portfolio consists of diesel cars and if the government is to change their policy and increase the excise or levy any other tax, then the subsequent demand may be less than what has been projected.

This will lead to a major increase in break even period or even a loss for Renault," Nassif said.

Inconsistent policies or lack of policies will act as deterrent for new players as they cannot anticipate what the playing field will be in the coming years, he added.

Similarly, homegrown auto major Mahindra & Mahindra had termed the calls for imposing additional tax on diesel vehicles as "retrograde" as any such move will only impede growth of the industry which has had a difficult year in 2011.

Earlier, SIAM had said any move to impose additional duties on diesel vehicles will "stigmatise" diesel technology which will be very unfair to the sector.

SIAM had said that out of a total of 61.68 million tonnes of diesel consumed in India across various sectors during 2010-11, diesel personal cars consumed only 1.03 per cent, while for diesel taxi segment it was at 1.82 per cent.

Jeeps used for personal purpose accounted for 0.53 per cent and the same category of vehicle used for commercial purpose consumed 3.44 per cent, it had said.

However, countering this, Centre for Science and Environment (CSE) had said as per the government's Petroleum Planning and Analysis Cell (PPAC) data, which was cited in the Planning Commission's Kirit Parikh Committee Report of 2010, the total diesel consumption by cars, jeeps, MUVs, taxis and three-wheelers stood at 15 per cent.

CSE had demanded an additional duty of up to Rs 1.62 lakh on big diesel cars to prevent the misuse of subsidised diesel for luxury.

Expressing similar views, the newly-elected President of the industry chamber Assocham Rajkumar Dhoot had said subsidies on diesel should not be offered to luxury cars, telecom towers and other industries and must be restricted only to agriculture and transport sectors.

The government should levy additional duties to luxury players, who are using subsidised diesel, he had said.

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