Diesel tax move retrograde, say carmakers

Carmakers are opposing the government move to increase taxes on diesel-run cars, terming it as a retrograde step that would further erode growth in the slow lane on which auto firms are already stuck.

The UPA government has been under pressure from both within the government and public sector oil refining and marketing companies to raise diesel prices, which the government is unwilling to do.

A tax on cars that run on heavily subsidised diesel has been floated by politicians as an alternative to limiting subsidy on diesel.

Diesel subsidy is also widely touted as the result of ''policy paralysis'' and lack of leadership within the UPA government that is slowing down growth in Asia's third largest economy.

Many in the UPA government see a tax on diesel cars as an alternative to the more unpopular move to increase prices of subsidised diesel, kerosene and LPG as also a means to raise resources for the debt-ridden government.

Carmakers say the diesel tax, pegged around Rs80,000 in a 2010 recommendation, would  further jack up the cost of diesel cars that are already way above those of their petrol variants.