Union Minister Nitin Gadkari announced on Tuesday his intention to introduce a 10% surcharge on diesel-powered vehicles. He revealed this plan during his address at the 63rd SIAM Annual Convention and mentioned that he would formally present this proposal to Finance Minister Nirmala Sitharaman later in the day. Gadkari referred to this tax as a "pollution tax," emphasizing its role in curbing the use of diesel vehicles across the country.
He argued that this tax is essential to drive the transition toward cleaner energy sources, as it appears that people are not inclined to change their habits without financial incentives. Gadkari encouraged the automotive industry to actively promote diversification toward cleaner technologies. He acknowledged that while this industry has benefited from the development of good roads, it has also contributed to increased pollution, causing discontent among the Indian population.
During his speech at the conference, Gadkari appealed to the auto industry to reduce the production of diesel vehicles and shift their focus toward cleaner fuels, warning that failing to do so could result in the government imposing additional taxes.
"This task isn't a formidable challenge, as it has already been successfully executed worldwide," Gadkari asserted. He emphasized the widespread availability of the necessary technology and urged the automotive industry members to take proactive steps to support the transition away from diesel and petrol.
Gadkari highlighted that the present moment is opportune for shifting from reliance on diesel and petrol to embracing "biofuels, alternative fuels, and energy sources for mobility." He also noted the remarkable growth of the automotive industry, which has risen from the 7th position in 2014 to its current 3rd position, transforming from a 4.5 lakh crore to a 12.5 lakh crore industry.
Following the minister's remarks, shares of Indian automakers such as Tata Motors, Mahindra and Mahindra, and Ashok Leyland experienced declines ranging from 2.5% to 4%.
"Nitin Gadkari states, 'No active consideration of such a proposal,"
In a subsequent statement on X (formerly Twitter), Nitin Gadkari clarified that the government is not currently actively considering any proposal of the sort.
He addressed recent media reports suggesting a potential 10% GST increase on diesel vehicle sales and emphasized the urgency of clearing up any misconceptions. Gadkari stressed that there is no ongoing deliberation within the government regarding this proposal.
He further elaborated on the government's commitment to achieving Carbon Net Zero by 2070 and tackling air pollution caused by harmful fuels like diesel. Given the substantial growth in automobile sales, Gadkari highlighted the importance of proactively adopting cleaner and more environmentally friendly alternative fuels. These alternative fuels, he emphasized, should be domestically produced, cost-effective, and free of pollution.
