In a recent written reply to questions raised in Parliament, Union Minister of Road, Transport, and Highways, Nitin Gadkari, emphasized that the government is not contemplating the imposition of an extra 10 percent tax on vehicles powered by diesel engines. In response to queries in Parliament, Gadkari has now provided clarification, putting to rest the uncertainty that had been looming over the sector. In his written response to parliamentary inquiries, Gadkari reiterated that there are no current plans to impose an additional 10 percent tax on diesel vehicles. The public, particularly those who own diesel-powered vehicles, had been anxious about the rumored tax increase. Earlier in the year, a panel formed by the Ministry of Petroleum and Natural Gas recommended the government impose a ban on the sale of diesel-powered four-wheel vehicles in cities with a population of more than 1 million from 2027. Apparently, the minister, while encouraging people to embrace green fuels, said that he might consider proposing an additional 10% tax on diesel-run vehicles and generators if there is excessive usage. His exacts words were, “I am going to handover a letter to the Finance Minister this evening stating that an additional 10 per cent GST be put on diesel-powered vehicles" Further noting that diesel a highly hazardous fuel and makes the country dependent on imports, he adds, "Say goodbye to diesel... Please stop making them, otherwise we will just increase the tax so much that it would become difficult to sell diesel cars."
Following this several media reports said ‘Centre is likely to impose additional 10% GST on the sale of diesel vehicles’. Soon after, auto stocks, including Maruti eVx and Tata Motors, fell sharply.Later clarifying the same, Gadkari took to Twitter, saying, There is an urgent need to clarify media reports suggesting an additional 10% GST on the sale of diesel vehicles. It is essential to clarify that there is no such proposal currently under active consideration by the government. In line with our commitments to achieve Carbon Net Zero by 2070 and to reduce air pollution levels caused by hazardous fuels like diesel, as well as the rapid growth in automobile sales, it is imperative to actively embrace cleaner and greener alternative fuels. These fuels should be import substitutes, cost-effective, indigenous, and pollution-free.
Key Features
- Clarification on Diesel Tax Proposal: Nitin Gadkari, Union Minister of Road, Transport, and Highways, has confirmed that there is no current proposal for an additional tax on diesel vehicles.
- Phasing Out Diesel for Greener Fuels: Gadkari had previously expressed the need to phase out diesel in favor of cleaner and greener alternative fuels.
- Potential Ban on Diesel Four-Wheeler Sales in Cities from 2027: The article highlights discussions surrounding a proposed ban on diesel four-wheeler sales in large cities starting from 2027.
- Gadkari's Warning to Automakers: In September, during the annual conference of the Society of Indian Automobile Manufacturers, Gadkari warned both domestic and foreign automakers about the possibility of a 10 percent additional tax on diesel vehicles. This warning was contingent on their failure to transition towards cleaner fuels.
- Swift Clarification on the Same Day: The article notes that despite Gadkari's initial warning, he quickly clarified on the same day that there was no active proposal for the 10 percent tax.
- Commitment to Carbon Net Zero and Air Quality Improvement: Gadkari's statement on social media platform X underscores the government's commitment to achieving Carbon Net Zero by 2070.
- Call for Cleaner and Indigenous Alternative Fuels: The minister's remarks stress the need for alternative fuels that are not only cleaner but also indigenous and cost-effective.
Gadkari’s comments on an additional 10 percent tax on diesel vehicles had fuelled concern among the automakers and the public as India, being the third largest automotive market in the world, has considerable sales of vehicles powered by diesel engines. The share of diesel cars in the passenger vehicle segment has reduced to around 18 percent of the sales, while diesel variants continue to contribute a significant part of commercial vehicle sales. Diesel accounts for about two-fifths of India's overall refined fuel consumption and close to 80 percent of the diesel consumed in the country is used in the transport sector.