The government's plans to impose new taxes on diesel cars has received yet another criticism after Ford India stated its future investments in India could become uncertain. Speaking about the issue, Ford India chief Michael Boneham said the carmaker's investments will need to be asses if the new tax on diesel cars is imposed.
Ford India had announced huge investments in India last year starting with a $1 billion for a new car plant in Sanand, Gujarat. It has also planned ti invest $72 million to increase diesel engine production in its Chennai plant.
Mr Boneham said these new investments have to be assessed even if they go ahead with the plans. He added that the new diesel car tax would have had a negative impact on the market situation and also create an atmosphere of uncertainty for any future investments.
However, he stated that the tax on diesel cars would not have an imp[act on existing investments. Ford India was planning to boost diesel engine production by 80,000 units in Chennai and an additional 2.7 lakh units in its new plant in Sanand. This plan would probably be affected if the government goes ahead to increase taxes on diesel cars.
The Indian car market has been hit by increasing petrol prices. Demand for diesel cars has increased dramatically in recent months and carmakers have responded to it by making investments to boost diesel car production. If the government of India goes ahead with its plans to add new taxes on diesel cars, carmakers fear, this demand will come down severely affecting their investments.
In a startling revelation, Mr Boneham has stated that demand for certain diesel cars has actually come down. He added that only a few diesel models commanded a waiting period and some diesel cars are now readily available at showrooms. He also added that with slow sales. Ford India was not completely utilizing its diesel car capacity.