Mr Gadkari said that the rising demand has led to India relying on fuel imports. (File)
In a warning to Indian carmakers, Union Transport Minister Nitin Gadkari today said that the government will have no option but to increase tax on diesel vehicles and make their sales "difficult" if manufacturers do not limit their production.
"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," Mr Gadkari said while speaking at 63rd Annual SIAM convention in New Delhi.
After initial reports suggested that the additional tax hike could be as high as 10%, the minister clarified that no specific proposal for such a hike was currently under consideration.
"There is an urgent need to clarify media reports suggesting an additional 10% GST on the sale of diesel vehicles. It is essential to clarify that there is no such proposal currently under active consideration by the government. 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 in a post on X, formerly Twitter.
Currently, automobiles attract a 28% GST along with an additional cess (ranging from 1% to 22% as per the vehicle type). SUVs attract the highest tax -- 28% GST coupled with 22% cess
Calling diesel a "hazardous fuel", the minister said that the rising demand has led to India relying heavily on fuel imports. The number of diesel cars has fallen from 53% in 2014, to 18% now, he said, calling it a "good sign".
The minister asked carmakers to reorient their manufacturing to focus on environment-friendly fuels like ethanol and green hydrogen -- a move which could to facilitate the introduction of more electric vehicles on Indian roads.
Carmakers like Maruti Suzuki and Honda have halted manufacturing of diesel passenger vehicles.