Petroleum Ministry of India has recommended to the Finance Ministry to levy additional excise duty on diesel cars in India in budget of year 2012-13 so that the demand for diesel cars and consequently diesel fuel in India is decreased. The step has been taken to reduce the financial burden on the Government which is bearing the subsidies on the Diesel fuel which is sold at subsidized price in Indian markets. If the recommendations are implemented, the Diesel cars are likely to cost as much as Rs. 80,000 higher than their present prices (before budget of 2012-13) starting from coming financial year.
The additional excise duty will be used to recover the losses to the public sector oil companies which are facing losses because of under-recoveries. There is a lot of political pressure attached to the prices of Diesel in India as it’s a primary fuel for farming equipment as well as the road-transportation fuel in India which affects the commodity prices and inflation in India.
With the difference in technology and higher build construction required for a diesel engine compared to a petrol engine, the Diesel engine cars in India are already about Rs. 60,000 to Rs. 1,00,000 costlier than the same car with petrol engine. With additional excise duty (if implemented), the diesel cars will become between Rs. 1.4 Lakhs to Rs. 1.8 Lakhs more costly compared to petrol cars which have lower initial cost but higher running cost because of high petrol prices in India.
Many Indian automobile makers have been keeping their expansion plans for Diesel cars and Diesel engine plants on hold till the Budget of 2012-13 is passed.
Source: Carblogindia
Source: Carblogindia
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