Diesel car price hike: Gadkari clarifies remark on 10% additional tax

Soon after Union Minister for Road Transport and Highways Nitin Gadkari's comment on the proposal of 10 per cent additional GST on diesel engine vehicles was reported, he denied any such proposal. The union minister took to social media platform X (previously Twitter) to make a clarification, stating that there is no such proposal currently under active consideration by the Indian government. This came as a complete U-turn after the minister revealed that he would submit a proposal to the Finance Minister to put 10 per cent additional GST on diesel vehicles.

Earlier on Tuesday, Gadkari said that he would draft a proposal to the Finance Minister asking for a 10 per cent GST on diesel engine-powered vehicles. The idea behind this strategy was to discourage the automakers from manufacturing and selling diesel engine-powered vehicles in India. He also stated that if the auto industry doesn't stop making diesel cars, the government would increase taxes in a way that will make selling diesel vehicles difficult.

However, soon after that, Gadkari took to X to make the clarification, where he stated that there is no such proposal currently under active consideration by the government. “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," the minister wrote in his social media post.

Earlier on Tuesday, PTI reported that speaking about the proposal for a 10 per cent tax on diesel cars, Gadkari said that the share of diesel engines in the Indian vehicle fleet has come down from 63 per cent in 2014 to 18 per cent in 2023. He also reportedly said that diesel is a hazardous fuel, and India is a huge importer as well. "Industry must suo moto reduce diesel engine production, lest the government is forced to increase the tax on diesel vehicles," the minister reportedly said.

He also reportedly said that, “I am going to handover a letter to the Finance Minister this evening stating that an additional 10 per cent GST be put on diesel-powered vehicles." The report further cited Gadkari saying, “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."