Nitin Gadkari on Additional 10% GST On Diesel Cars; Auto Stocks Recover: “No Such Active Proposal”

Nitin Gadkari, the minister of state for finance, intends to ask Nirmala Sitharaman for permission to levy an extra 10% GST on diesel engines and automobiles.

Nitin Gadkari said at the 63rd SIAM Annual Convention that it is a “pollution tax” and the only method to decrease the use of diesel automobiles in the nation.

Gadkari added, “Request industry to reduce production of diesel vehicles or else additional tax will be required.”

“I urge you to slash diesel car output. If you don’t cut back, our taxes will have to go up. According to Gadkari, we would significantly raise taxes, making it impossible for you to sell diesel cars.

He continued by expressing concern that the government will raise tariffs to such an extent that it would be difficult for businesses to market diesel automobiles. Gadkari threatened to raise taxes if the manufacture of diesel vehicles didn’t decrease.

In order to urge the GST increase, Gadkari said that he has written a letter and plans to meet with Finance Minister Nirmala Sitharaman on Tuesday.

Since fuel prices were deregulated in 2014, fewer diesel automobiles are being sold in India. In the most recent fiscal year, just 18% of all passenger cars sold locally used diesel, down from 53% in FY14.

Gadkari recommended that the car sector seek to speed up the switch to electric vehicles, biofuels to reduce vehicle pollution, and crude imports.

Later, Gadkari clarifies his statement

The statement states, “There is an urgent need to clarify media reports suggesting an additional 10% GST on the sale of diesel vehicles,” and was made by Nitin Gadkari on his official account at the social networking site X a short while afterwards. It is crucial to make it clear that the administration is not now actively considering any such plan. It is crucial to actively embrace cleaner and greener alternative fuels in order to meet our promises to reach Carbon Net Zero by 2070, lower air pollution levels brought on by dangerous fuels like diesel, and keep up with the explosive boom in vehicle sales. These fuels have to be pollution-free, cost-effective import alternatives that are produced locally.

Vehicle Stocks Recover

After Union Minister Nitin Gadkari stated that the government is not currently actively considering any proposals regarding an additional 10% GST on the sale of diesel vehicles, shares of Mahindra & Mahindra Ltd (M&M), Maruti Suzuki Ltd, Ashok Leyland Ltd, and other manufacturers of diesel vehicles gained some lost ground.

M&M, which earlier today touched a low of Rs. 1,513, rebounded to a BSE price of Rs. 1,546.65 but was still down 2.24 percent. Ashok Leyland was down 2.98 percent and trading at Rs 179.30. Earlier today, the price of this stock fell to 176.90. After falling to a low of Rs. 10,396 Maruti Suzuki recovered all of its losses. Off its day’s low of Rs. 615.60, Tata Motors was trading at Rs. 621.25. This stock’s decline was 2.12%.

Gadkari has already been quite vocal about his opinions on the negative aspects of diesel cars. Gadkari has advised automakers to restrict the development and sale of automobiles with diesel engines and to encourage alternative technologies back in 2021.

As India joined the Global Biofuels Alliance at the G20 Summit, the minister emphasized the increased emphasis on biofuels and alternative fuels, emphasizing that this is a primary priority.

“India imports 89% of its crude oil, which poses a serious problem. Because of this, PM Modi has given alternative and biofuels the highest priority, said the Union Minister. He maintained his support for phase-out of diesel engines and said that the fuel is harmful and drives up import costs.

Nitin Gadkari also questioned why ethanol cannot be used to power buses and trucks. He also praised the sector for putting a stronger emphasis on EVs and other fuels.

The event’s keynote speaker, Vinod Aggarwal, president of SIAM and MD-CEO of VE Commercial Vehicles Ltd., stated: “The auto sector contributes 6% to GDP and 40% to manufacturing GDP. The previous two years have seen significant industry growth.

Aggarwal emphasized that the market for entry-level cars and two-wheelers is under pressure. The sector today has a value of more than Rs 12 lakh crore. If problems at the entry level are resolved, industry growth may be improved.