'Rs 3k cr investment on hold as cos await clarity on diesel'

Mar 12, 2012 |

New Delhi

Tags:

Lack of clarity on diesel pricing policy has resulted in automobile companies, including Maruti Suzuki and Hyundai, holding up investments of more than Rs 3,000 crore in India, according to industry body SIAM.

"Many of our members are still unclear whether they should invest on diesel technology or not in India as there is no clarity on how the fuel will be priced in future. This has resulted in more than Rs 3,000 crore of investment being held back," Society of Indian Automobile Manufacturers (SIAM) Director General Vishnu Mathur said.

While he did not share the specific investments of each company, he said firms that have held back investing on diesel engine plants include Maruti Suzuki, Hyundai Motor India, Ford India, General Motors India and Tata Motors.

In November last year, Hyundai Motor India Ltd (HMIL) announced putting on hold its Rs 400-crore diesel engine plant which would have an installed capacity of 1.5 lakh units per annum.

The plant was envisaged to manufacture three different engines of 1.1 litre, 1.4 litre and 1.6 litre capacities only for the domestic market.

Maruti Suzuki India (MSI), on the other, has been maintaining that without a clear-cut policy on how the diesel fuel will be priced and how diesel vehicles will be taxed, it will be difficult to put its money on a new diesel engine plant.

MSI Chairman R.C. Bhargava had said that in the absence of a clear roadmap on how diesel prices would be placed in the future, the company has been unable to decide on whether to invest on increasing production capacities for diesel or petrol engines.

At present, petrol price is deregulated but diesel price is still decided by the government, which provides subsidy on the fuel.

The auto industry is also apprehending that 'diesel tax' could be levied in the upcoming Budget as is being demanded from some quarters to avoid the subsidised fuel benefiting the affluent.

Mathur, however, said such a notion is misplaced as less than two per cent of the total diesel consumed in India is used by personal passenger vehicles.

Such a move will ‘stigmatise the diesel technology’ which has proven to be superior in terms of fuel economy and is also eco-friendly, he said, instead of singling out diesel vehicles, diesel fuel price should be made market driven.

Post new comment

<form action="/comment/reply/133313" accept-charset="UTF-8" method="post" id="comment-form"> <div><div class="form-item" id="edit-name-wrapper"> <label for="edit-name">Your name: <span class="form-required" title="This field is required.">*</span></label> <input type="text" maxlength="60" name="name" id="edit-name" size="30" value="Reader" class="form-text required" /> </div> <div class="form-item" id="edit-mail-wrapper"> <label for="edit-mail">E-Mail Address: <span class="form-required" title="This field is required.">*</span></label> <input type="text" maxlength="64" name="mail" id="edit-mail" size="30" value="" class="form-text required" /> <div class="description">The content of this field is kept private and will not be shown publicly.</div> </div> <div class="form-item" id="edit-comment-wrapper"> <label for="edit-comment">Comment: <span class="form-required" title="This field is required.">*</span></label> <textarea cols="60" rows="15" name="comment" id="edit-comment" class="form-textarea resizable required"></textarea> </div> <fieldset class=" collapsible collapsed"><legend>Input format</legend><div class="form-item" id="edit-format-1-wrapper"> <label class="option" for="edit-format-1"><input type="radio" id="edit-format-1" name="format" value="1" class="form-radio" /> Filtered HTML</label> <div class="description"><ul class="tips"><li>Web page addresses and e-mail addresses turn into links automatically.</li><li>Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd></li><li>Lines and paragraphs break automatically.</li></ul></div> </div> <div class="form-item" id="edit-format-2-wrapper"> <label class="option" for="edit-format-2"><input type="radio" id="edit-format-2" name="format" value="2" checked="checked" class="form-radio" /> Full HTML</label> <div class="description"><ul class="tips"><li>Web page addresses and e-mail addresses turn into links automatically.</li><li>Lines and paragraphs break automatically.</li></ul></div> </div> </fieldset> <input type="hidden" name="form_build_id" id="form-a35a4d2dd4e8e2e64711ee99cdf3f670" value="form-a35a4d2dd4e8e2e64711ee99cdf3f670" /> <input type="hidden" name="form_id" id="edit-comment-form" value="comment_form" /> <fieldset class="captcha"><legend>CAPTCHA</legend><div class="description">This question is for testing whether you are a human visitor and to prevent automated spam submissions.</div><input type="hidden" name="captcha_sid" id="edit-captcha-sid" value="80682625" /> <input type="hidden" name="captcha_response" id="edit-captcha-response" value="NLPCaptcha" /> <div class="form-item"> <div id="nlpcaptcha_ajax_api_container"><script type="text/javascript"> var NLPOptions = {key:'c4823cf77a2526b0fba265e2af75c1b5'};</script><script type="text/javascript" src="http://call.nlpcaptcha.in/js/captcha.js" ></script></div> </div> </fieldset> <span class="btn-left"><span class="btn-right"><input type="submit" name="op" id="edit-submit" value="Save" class="form-submit" /></span></span> </div></form>