Carmakers To Ramp Up Investment With No Diesel Tax

Published: Monday, March 19, 2012, 12:35 [IST]

The auto industry was under tremendous pressure days before the union budget for 2012-13 was to be presented due to reports about a possible diesel car tax. This tax would make diesel car prices to shoot up by as much as 20 per cent. This had also meant huge investments to ramp up production was with held by carmakers. The Society Of Indian Automobile Manufacturers (SIAM) had said carmakers were wary of making investments in the scenario of a diesel car tax.

Carmakers are now speaking about these investments as the budget has not launched this much feared diesel car tax. We had earlier reported that an investment of about Rs.3,000 crores was with held by carmakers as they were awaiting the budget. Now Mahindra, Maruti Suzuki and Hyundai have confirmed that they will go ahead with their plans.

Speaking to the media, post the budget, Mahindra and Mahindra boss Dr Pawan Goenka said the budget not mentioning any new diesel car tax had encouraged carmakers to go ahead with any withheld investments. He also confirmed that Mahindra would now no longer with hold any investments for increasing its diesel car production capacity.

Hyundai Motors India, which had halted an investment of Rs.400 crores for its diesel engine plant last year is now reconsidering its decision. A Hyundai Motors spokesperson has stated that a decision on the diesel engine plant would be made within two weeks. Hyundai's diesel engine plant has been designed to build about 1.5 lakh diesel engines per year.

India's leading carmaker Maruti Suzuki which had earlier said it could not make any new investments unless there is a clarity of policy from the government has said the non imposition of the diesel car tax in the budget was encouraging to carmakers who had diesel car manufacturing capacities. However it has not yet given a complete green signal to new investments.

Maruti Suzuki boss RC Bhargava has said diesel prices also need to be market driven and must be deregulated. SIAM had earlier stated that carmakers were unclear to invest on diesel car technology in India as there was o clarity on how diesel would be priced in the future.

Article Published On: Monday, March 19, 2012, 12:35 [IST]

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