'Will urge Finance Minister to levy 10% pollution tax on diesel engines': Nitin Gadkari

To expedite the switch to cleaner automotive fuels, and push the automotive industry towards alternate propulsion technologies, the Indian government could mull hiking tax on vehicles that run on diesel.

The Union Minister for Road Transport and Highways, Nitin Gadkari, stated that the industry must accelerate the transition from diesel and petrol to alternative fuels, which are greener for the environment and will cut the country's fossil fuel imports. 

Speaking at the 63rd SIAM Annual Convention, Gadkari said, "Diesel is a hazardous fuel for the environment and the industry must suo moto reduce diesel engine production. As a deterrent, I would appeal to the Finance Minister to increase the GST on diesel cars by 10% as a pollution tax," Gadkari said. 

India currently imposes a 28% tax on and additional so called cess is levied, depending on the vehicles' engine capacity. 

"Say bye to diesel soon, otherwise we will increase so much tax that it will become difficult for you to sell these vehicles, Gadkari told the conference.

The notable hike would make it unviable for the industry to sell diesel vehicles over their petrol, CNG, or EV counterparts, especially when diesel cars see a restricted serviceable life of only 10 years in places like the National Capital.

While the penetration of diesel has seen a marked reduction, de-growing from almost 48 percent in 2014 in the passenger vehicle segment, to only 18 percent in 2022, with the stricter BS VI emission norms being the key inhibitors for the significant decline, the Minister said the industry must aspire to completely stop the manufacturing and sale of diesel vehicles, which he termed as "polluting vehicles.

India presently imports around 89% of its fossil fuel consumption, and as per Petroleum Ministry data, around 81 percent of all diesel consumed in the industry was used in the transportation sector.

The additional tax in India could mean the end of the road for diesel vehicles, which are already being seen in bad light the world over. For instance, automakers in Europe have already taken targets to switch to full electrification as early as 2030.

The Minister, however, clarified in a tweet that said, "There is no such proposal currently under active consideration by the government."