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Carmakers Fear Diesel Subsidy Withdrawal
The car industry is already reeling under a sudden slowdown in sales. Diesel cars have been driving the sales so far this year. Several carmakers have already invested hundreds of crores in developing new diesel cars. If the government removes subsidy on diesel, carmakers fear even the sales of diesel cars will also come down.
General Motors India president Karl Slym said: “We are for market driven price of diesel. Already the sales of car and passenger vehicles are sluggish in the domestic market and any change in policy will further impact it." The American carmaker recently launched the new Chevrolet Beat Diesel.
The Society of Indian Automobile Manufacturers has welcomed the government's move and has said any step towards making market-linked pricing of automotive fuels was a welcome move.
Diesel attracts a government subsidy of Rs.6.08 per litre. The removal of this subsidy will mean diesel will still remain a cheaper alternative to petrol. Diesel will be at least 30 per cent cheaper than petrol and the trend of increasing diesel car sales can be expected to continue.
This dual pricing policy of diesel envisages no subsidy to diesel sold to passenger vehicles while the subsidy will continue to commercial vehicle users.
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