'Additional tax on diesel vehicles may cause uncertainty on investments'

Ford India today said that the Government’s proposal to impose additional tax on diesel vehicles will create an uncertainty on future investments in the country.

The company, which had last year announced an investment of $1 billion on a new manufacturing facility at Sanand in Gujarat and another $72 million for diesel engine production in Chennai, said it would have to “assess” these investments while still going ahead with it.

“Given the current market situation, any additional tax on diesel vehicles will have a negative impact...Action like this creates uncertainty on future investments,” Ford India President and Managing Director, Mr Michael Boneham, told PTI.

When asked if any additional duty on diesel vehicles would impact the current investments, he replied in the negative.

He said: “No, but we will assess our current investments...These investments were made after certain assumptions based on market conditions. If things change, we have to look at what kind of capacity we are installing.”

Higher production

The new facility at Sanand was envisaged to initially produce 2.40 lakh vehicles and 2.7 lakh engines per year creating 5,000 jobs.

With the $72-million investment at Chennai plant, Ford India was planning an additional output of 80,000 engines by this year to take the total to 3.3 lakh units per annum.

Although the company is in India for the long-term, he said: “I would have to go back (to the headquarters) to explain these investments”, under the circumstances.

Mr Boneham said as such the car market in India was struggling as petrol car sales are falling and any hike in excise duty on diesel cars would be a further blow.

COMMENT NOW