Dept of Heavy Ind opposes additional tax on diesel vehicles

Opposing the government's proposal to impose an additional tax on diesel vehicles, the Department of Heavy Industry (DHI) today said it will submit a report to the Finance Ministry next week.

"We will again press for not levying the taxes. We will be submitting a report to the Finance Ministry on Monday to oppose the additional levy on diesel vehicles," Joint Secretary in the DHI Ambuj Sharma told reporters here.

The Finance Ministry has been mulling over imposing additional levy on diesel vehicles, a move which may discourage consumption of subsidised fuel by personal vehicle owners.

Sharma was speaking on the sidelines of a function jointly organised by Automotive Component Manufacturers Association of India (ACMA) and Society of Indian Automobile Manufacturers (SIAM).

The automobile industry is opposed to the idea of diesel vehicles being taxed more, saying such a move will hurt the industry, which is already reeling under a slump and future investments could also be hurt.

"We, in the Department, have backed the industry demand and we are convinced that any imposition on any particular segment of vehicles will depress the overall market as it stands a little bit depressed and not in the same trajectory as it was in the past year," Sharma said.

Overall economy is slowing down, imposition of levy on any particular segment will have a have a negative impact on the industry, he added.

On June 6, top executives of automobile firms, including Mahindra & Mahindra President (Automotive and Farm Equipment sectors) Pawan Goenka, Tata Motors Managing Director (India operations) P M Telang and Maruti Suzuki India Managing Director and CEO Shinzo Nakanishi, had met Finance Ministry
officials to discuss the issue.

The Ministry has asked the automakers to provide production data of diesel cars before taking a final decision on the issue.

Minister of Heavy Industries and Public Enterprises Praful Patel had earlier taken up the issue with Finance Minister Pranab Mukherjee in this regard.

At present, excise duties on passenger cars range between 12% and 27% with a fixed duty of Rs 15,000 depending on engine size and length of the vehicle.