New Delhi: Automobile industry body SIAM on Thursday said it favours dual pricing of diesel, a move mooted by the Finance Ministry to prevent subsidised fuel being used in personal vehicles.
It, however, said the industry was opposed to increasing taxes on diesel vehicles as it would hit the auto industry, which is already reeling under a slump, and future investments could also be jeopardised.
Representatives of the auto industry had met finance ministry officials yesterday to discuss various issues, including higher tax on diesel vehicles.
"We were asked if dual pricing (for diesel) is done, would the industry oppose it. We said no. In fact, we have been suggesting it," former president of Society of Indian Automobile Manufacturers (SIAM) Pawan Goenka told reporters in a conference call.
He was among the industry representatives, who met finance ministry officials, including Finance Secretary R S Gujral and Central Board of Excise and Customs Chairman S K Goel.
The industry also expressed views that if prices of diesel for personal consumption were to be increased it had to be done in a phased manner, he added.
Goenka, however, admitted that dual pricing of diesel would be tough to implement and there was no discussion on how it could be done.
On the issue of higher tax on diesel vehicles, he said: "This is not an option. It will kill demand and will not put demand for petrol vehicles back."
Such a move, he said, would "jeopardise" investments made by various companies like General Motors and Ford in India and also those planned by firms like Maruti Suzuki and Hyundai Motor India for expanding diesel engine capacity.
Goenka, however, said the officials have not communicated as to whether the government was planning to hike excise duty by a few percentage or impose a fix amount on diesel vehicles.
Before the Budget there was suggestions for imposing one-time excise of Rs 80,000 on diesel vehicles but was not considered.
At present passenger vehicles attract excise duties ranging between 12 percent and 27 percent depending on engine capacity and length of vehicle.
With the widening of gap between the prices of petrol and diesel fuel, consumers have moved heavily in favour of diesel vehicles he said, however, added that demand is not as robust as expected.
"If there is more tax on diesel vehicles, then the sales growth projection of 11-13 percent for cars this fiscal will not be met and it would come down," Goenka said.