Nitin Gadkari, Minister for Road Transport & Highways India, spoke at the 63rd SIAM Annual Convention 2023 on Tuesday, urging attendees to switch to "green fuels" instead of traditional, polluting fuels like petrol and diesel. The Minister additionally expressed that if there persists a high level of utilisation of diesel-powered vehicles and generators, he might consider suggesting an extra 10% tax on them as a 'pollution tax' but later in a tweet he clarified that "there is no such proposal currently under active consideration by the government". Currently, the government enforces a tax rate of 28 per cent on diesel automobiles, accompanied by an extra levy known as a cess, which varies according to the engine capacity of the vehicles. Immediately after the announcement, there was a significant decline in the stock prices of prominent vehicle manufacturers like Maruti Suzuki and Tata Motors.
What did Nitin Gadkari Say?
During the Minister's address at the ongoing SIAM event, diesel was characterised as a fuel with negative consequences. He continued by saying that diesel cars would drop from 52% to 18% of the market after 2014. He insisted that there should not be an increase in diesel vehicles as the market develops. In order to reduce the number of diesel-powered vehicles on the road, he urged both the general public and automakers to take independent action.
Also Read: No Additional 10% GST on Diesel Vehicles in India, Confirms Nitin Gadkari
In the tweet, Nitin Gadkari stated, “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.”
How the Auto Stocks React?
The automakers faced a negative outcome as a result of Minister Gadkari's comment, as there has been a shift in consumer demand towards larger utility vehicles, particularly SUVs, which often utilise diesel fuel. At 12.30 pm, Maruti Suzuki was trading at Rs 1,0462, down Rs 72.90, or 0.69 per cent and Tata Motors was trading at Rs 618, down Rs 16.70, or 2.63 per cent. The stock price of Eicher Motors has decreased by Rs 46.80, representing a decline of 1.37 per cent, and is currently valued at Rs 3,357.65. Also, Ashok Leyland, Tata Motors and Mahindra & Mahindra, which produce diesel vehicles, fell as much as 2.5 per cent.
Diesel fuel is predominantly utilised in commercial and larger utility vehicles, while certain industrial machines and engines, such as generators, also rely on diesel as their primary source of energy.
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