Gadkari talks of 10% more tax on diesel vehicles, later clarifies no proposal

NEW DELHI: Road Transport and Highways Minister Nitin Gadkari on Tuesday spoke of the need to levy an additional 10 per cent tax on diesel-run vehicles to help cut emissions, but later clarified that there was no proposal under government consideration to impose such a tax.

Speaking at the annual convention of automobile manufacturers body SIAM, Gadkari said rising pollution level is a serious health concern and there is a case for increasing taxes to dissuade sale of diesel vehicles.

"I am requesting the Finance Minister to impose an additional 10 per cent GST on diesel engines/vehicles. This is the only way to phase out diesel vehicles," he said, indicating a meeting was scheduled with the Finance Minister for handing over a letter he had drafted on the issue.

But soon after he took to X, formerly known as Twitter, to clarify the government's position.

"It is essential to clarify that there is no such proposal currently under active consideration by the government," he said in a post on X, referring to media reports quoting him as suggesting an additional 10 per cent GST on diesel vehicles.

He emphasised that there was a need to embrace cleaner fuels to cut emissions.

"In line with our commitments to achieve Carbon Net Zero by 2070 and to reduce air pollution levels caused by hazardous fuels like diesel, as well as the rapid growth in automobile sales, it is imperative to actively embrace cleaner and greener alternative fuels. These fuels should be import substitutes, cost-effective, indigenous, and pollution-free," he said on X.

At the Society of Indian Automobile Manufacturers (SIAM) convention, he had warned that the government would increase taxes so much that it would become difficult to sell diesel vehicles.

Most of the commercial vehicles in the country currently run on diesel.

In the passenger vehicle segment, various carmakers including Maruti Suzuki India and Honda have already stopped manufacturing diesel cars.

Gadkari said the contribution of diesel cars has already come down drastically in the country and the manufacturers need to stop selling them in the market.

The minister also highlighted that India is utilising a major portion of fossil fuels in the transport sector which is posing a big economic as well as pollution challenge.

He suggested alternatives such as biofuels, ethanol and green hydrogen in addition to electric vehicles.

At the SIAM annual convention, the minister said the country is making good roads across the country, which is leading to the growth of the automobile industry.

"The auto industry is growing at 15-18 per cent and it is also leading to enhanced usage of fossil fuels. If this goes on like this, you (companies) will be happy, but pollution will make the people of this country sad. So quickly leave petrol, diesel. Please focus on alternatives, this is my request to you," Gadkari said.

He further said, "I will request the finance minister for 10 per cent pollution tax as additional GST on all such engines utilising diesel, from generator sets to vehicle engines." Seeking cooperation from the auto industry, Gadkari said, "I think you will not force me to push this proposal... this is the appropriate time, it is not rocket science, this is already everywhere in the world... so I will request you all to take suo moto initiative and cooperate with us in moving away from diesel/petrol, this is my humble request." Terming diesel as a hazardous fuel, he noted that the country has to import the fuel to meet the demand.

"Say goodbye to diesel... Please stop making them, otherwise, we will just increase the tax so much that it would become difficult to sell diesel cars" Gadkari said.

He said he would propose additional GST on diesel-powered generators as well.

Automobiles are currently taxed at 28 per cent GST, with additional cess ranging from 1 per cent to 22 per cent depending on the type of vehicle.

SUVs attract the highest GST at the rate of 28 per cent along with a compensation cess at 22 per cent.

Gadkari also asked the industry to focus on environment-friendly alternative fuels like ethanol.

He also asked the industry to focus on green hydrogen.

Gadkari reiterated that India needs to move away from fossil fuels in order to meet its carbon neutral target, which cannot happen without the cooperation of the auto industry.

Later, addressing the gathering, SIAM Vice President and Managing Director Tata Motors Passenger Vehicles, Shailesh Chandra said, "The need from the automotive industry to reach net zero ahead of nations pledge of 2070 is pretty much an imperative and the industry will strive to deliver as per the vision of the government." Automobiles are currently taxed at 28 per cent GST, with additional cess ranging from 1 per cent to 22 per cent depending on the type of vehicle.

SUVs attract the highest GST at the rate of 28 per cent along with a compensation cess at 22 per cent.

He also asked the industry to focus on green hydrogen.