Forced to hit the snooze button due to a shifting policy environment, the car industry is getting restive over a lack of clarity on fiscal issues.
The union budget to be presented on March 16 is expected to impose an extra levy on diesel cars in the country. At a time when the demand for diesel cars is at an all-time high, carmakers ranging from Maruti, Hyundai and Renault are unable to exploit the situation due to the talk of additional taxes on diesel cars, as suggested by the Kirit Parekh committee."The lack of clarity is baffling. We are not opposed to change but our investments run into thousands of crores," said Marc Nassif, managing director, Renault India. "We cannot be made to cross our fingers before every budget. It is very difficult to have a long-term strategy as sometimes there is no vision to what the government is doing."
Market leader Maruti has voiced concerns on this issue in the past, while its arch rival Hyundai has already postponed plans to set up a diesel engine factory in India. The industry is also questioning the rationale behind taxing diesel cars more.
"This is impractical and has no rationale," said Michael Boneham, president, Ford India. "Diesel cars are more fuel efficient and less harmful to environment and it will be a regressive step to discourage diesel in favour of petrol. The country would only end up paying more for oil imports."
"It is a fallacy to think that taxing diesel cars more will benefit petrol cars," said Pawan Goenka, president (automotive sector), M&M. "Instead, the slowdown will worsen."