New Delhi: Union Minister of Road Transport and Highways Nitin Gadkari on Tuesday told the automobile industry to move away from the “hazardous” diesel, or the government would impose an additional 10 per cent Goods and Services Tax on these vehicles.
However, he later clarified that there was no active proposal to levy such a tax.
“You can say bye-bye to diesel,” Gadkari said while speaking at the inaugural session of the 63rd annual session of industry body Society of Indian Automobile Manufacturers (SIAM). “I am requesting you. Else, we will increase the tax so much that it will be difficult for you to be able to sell vehicles. You are already doing it, that is why diesel sales are down.” He said the tax would be imposed on both passenger and commercial vehicles.
Addressing the auto industry, the minister added that he has already prepared a letter, and in a meeting with Finance Minister Nirmala Sitharaman Tuesday evening, he would request that “in the coming days, all engines running on diesel should be taxed an additional 10 per cent so that there is quick transformation, else doesn’t seem that people are in the mood to listen”.
While at the session Gadkari emphasised the government was very serious about the proposal, he later clarified in a post on X: “There is an urgent need to clarify media reports suggesting an additional 10 per cent 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,” the post added.
During the session, Gadkari also said that automibiles and anything which used diesel as a fuel would attract the “pollution tax”.
However, he also noted that the industry is making efforts and the share of diesel passenger vehicles in 2014 was 53 per cent, which came down to 18 per cent in 2023.
“You should reduce diesel production,” he told participants from the industry. “And if it doesn’t go down, we will have to increase tax. I am requesting you, diesel is a hazardous fuel, we also import at a huge scale.”
He added that fossil fuel import was an economic challenge as well as a pollution challenge.
“Automobile manufacturing is growing at a fast pace, and with it, the demand and import of fossil fuel,” he said. “While you will be happy with the growth, the citizens of India will be troubled by the pollution.”
Therefore, he said automakers should quickly leave “the way of petrol and diesel” and should move towards being pollution free.
“This is a request,” he said. “Else from generator sets to every engine that consumes diesel will attract additional 10 per cent GST.”
Stating it was not “rocket science”, the minister asked the industry to take suo moto action to get rid of diesel and petrol.
He also pointed out that the government had recently come out with a star rating for safety of vehicles and that “cleaner and safer vehicles are not possible without” industry support.
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