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Car manufacturers decide to hold investments in new diesel facilities

13 Mar 2012 Evaluate

Major automobile manufacturers have decided to hold investments in new facilities until the Budget is announced on March 16. This has led to a stalling of investments of more than Rs 3,000 crore, according to industry body Society of Indian Automobile Manufacturers (SIAM).

Major companies like Maruti Suzuki India, Hyundai Motor India, Ford India, General Motors India and Tata Motors are of the opinion that given the confusion about how diesel vehicles will be taxed and the pricing of diesel, it will be difficult to put money on diesel technology.

It has been proposed that an additional excise duty should be levied on diesel passenger cars to discourage the use of the subsidized fuel by the affluent. Diesel cars have seen a surge in their demand after petrol prices were deregulated by the government. Policy makers are also of the opinion that diesel prices themselves should be deregulated to reduce the subsidy burden of the government.

However, Director General of SIAM, Vishnu Mathur is of the opinion that such a notion is misplaced as less than 2% of the total diesel consumed in India is used by personal passenger vehicles. In fact as per them, such a move will 'stigmatise the diesel technology' which has proven to be superior in terms of fuel economy and is also eco-friendly.

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