Budget 2012-13: With no tax on diesel vehicles, auto makers mull expansion

Before the Budget 2012-13 was presented on Friday, Society of Indian Automobile Manufacturers (SIAM) had said that fear of diesel tax and lack of a clear roadmap on diesel pricing led auto companies to hold back investments of more than Rs 3,000 crore in India.

At present, petrol is deregulated but diesel prices are still decided by the government, which provides subsidy on the fuel that is used by the transportation sector and impacts the cost of several essential goods and services.

Rising petrol prices have increased manifold the demand for diesel vehicles over the past couple of years. Hence, of late, there has been strong demand from various quarters for an additional tax on diesel cars.

"There has been no mention of an additional tax on diesel vehicles or on the existing differential pricing of diesel in the Budget...I would therefore assume that diesel vehicles will not be treated any differently," Mahindra & Mahindra President (Automotive and Farm Equipment Sectors) Pawan Goenka told PTI.

He said this will encourage companies that had held back investments on new diesel engine capacities, awaiting clarity on the issue, to go ahead with their plans.