Union Transport and Highways Minister Nitin Gadkari said on Tuesday that he will propose a "pollution tax" in the form of additional 10 per cent tax on diesel vehicles and gensets in a bid to put air pollution.
Calling the rising level of pollution a health hazard for citizens, Gadkari said India has to import the fuel to meet the demand. "I am going to hand over a letter to the Finance Minister this evening stating that an additional 10 per cent GST be put on diesel-powered vehicles,” he said while speaking at the 63rd Annual SIAM convention in New Delhi.
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.
"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, adding that he will seek additional GST on diesel-powered generators too.
Following Gadkari's statements, shares of diesel automakers like Ashok Leyland, Tata Motors and Mahindra & Mahindra plunged up to 2.5 per cent. Tractor makers Swaraj Engines and Escorts Kubota also saw a dip of as much as 3 per cent in shares.
Oil marketing firms Hindustan Petroleum (HPCL), Bharat Petroleum (BPCL) and Indian Oil (IOC) also witnessed a drop in shares to the day's low.
Vehicles currently attract a 28 per cent GST, with additional cess ranging from 1 to 22 per cent depending on the type of automobile. The highest GST is for SUVs at 28 per cent along with a cess of 22 per cent.
Gadkari also asked the industry to focus on green hydrogen and environment-friendly alternative fuels like ethanol.
-- with inputs from PTI