The finance ministry is said to be thinking of imposing an extra 10-15 per cent tax on diesel cars, specifically on diesel SUVs and MUVs, in the forthcoming Union Budget. The government clearly has no stomach for lessening the diesel subsidy — every such proposal has been met with inaction, and the dual pricing idea dismissed as unworkable — on the grounds that this fuel is used by farmers as well as for public transport and to carry goods. Petrol prices were decontrolled some time back, though even here the oil companies cannot really raise prices when they want, even if a hike is warranted.
While most diesel cars cost a lot more than their petrol variants, and even spare parts for diesel cars are usually more expensive, prospective car owners prefer to buy diesel vehicles as the cost of diesel is far lower than petrol. So one can almost visualise aspiring car buyers gnashing their teeth at this extra levy. Carmakers, on the other hand, particularly the Japanese and Korean ones who make only petrol versions of their popular brands, might heave a sigh of relief. Some of them had been thinking of going in for manufacturing diesel variants of their cars, to cash in on the greater demand for diesel vehicles, but now they might wait a while to see what impact this additional tax will have on sales.