Due to quantifiable terms used such as “10% GST” or pollution tax, it was interpreted to be a real possibility
While addressing the audience at the 63rd SIAM annual convention in New Delhi, Nitin Gadkari highlighted auto industry’s contribution to the GDP and nation’s development. However, his statement about levying 10% GST on diesel vehicles created quite a controversy. Nitin Gadkari later issued a tweet, wherein he clarified that there is currently no such proposal under consideration by the government. However, he reminded that it is imperative to switch to cleaner and greener alternative fuels.
Light-hearted comments taken seriously
Nitin Gadkari is known for delivering on his promises. Be it rapid expansion of highways and expressways or implementation of stricter vehicle safety norms, Gadkari has ensured that things work out as per the set goals and objectives. So, when Mr. Gadkari makes a statement, it is usually taken quite seriously. This is exactly what happened at the 63rd SIAM annual convention in New Delhi.
If one listens to the speech given by Mr. Gadkari, it is clear that he is ‘requesting’ OEMs to shift to cleaner and greener fuels. He clearly says that he would be talking to the finance minister to consider imposing a 10% GST or pollution tax on diesel vehicles. He said that such a measure may be needed in case OEMs themselves do not start moving away from diesel.
The entire conversation was quite light-hearted and there was no real intention to apply 10% GST on diesel vehicles. One can say that Mr. Gadkari was just thinking out loud. But the statement was interpreted as a real possibility. It would have been better if quantifiable terms such as “10% GST” were not used. It’s the primary reason why everyone latched on to the 10% thing and ignored everything else that was spoken.
Proposal to ban diesel passenger vehicles by 2027
This is not the first-time diesel is being targeted as a source of pollution. Earlier this year, the Ministry of Petroleum and Natural Gas had presented a paper to ban diesel passenger vehicles by 2027. The reason for the proposed ban was given to be the high level of Particulate matter (PM) produced during the combustion process. The current status of the diesel ban proposal is not known.
As of FY23, share of diesel cars in India is around 19%. This is a significant number. However, there are carmakers that have already ditched diesel entirely. It includes India’s largest carmaker Maruti Suzuki. Several of the global brands have also shifted to petrol-only or other options such as ethanol, hybrid, plug-in hybrid and EVs. Hydrogen is another fuel option that can become more widely used in the future.
While diesel may eventually be phased out in India, it is unlikely to happen anytime soon. With awareness, users can be motivated to shift to greener fuel options on their own. Moreover, diesel cars are already getting costlier with stricter emission norms. As such, burdening diesel cars with more tax does not seem appropriate.