The Finance Ministry has asked carmakers to submit data in about a week of the possible impact on sales and investments if the excise duty on diesel cars is increased substantially.

It has also asked them to suggest alternative measures to reduce the recent distortion in sales between petrol and diesel cars. This follows a consultation meeting of top auto executives with senior Finance Ministry officials, including the Revenue Secretary, Mr R. S. Gujral, and the CBEC Chairman, Mr S. K. Goel.

“Their views (auto industry's) were heard, but the Finance Ministry has refused to disclose its intention. Any such decision is usually taken at higher political levels,” a senior Government official said.

Auto industry officials present at the meeting included Maruti Suzuki's MD Mr Shinzo Nakanishi, Tata Motors' MD Mr Prakash Telang, Ford's MD Mr Michael Boneham, apart from Mahindra's President (Automotive) Dr Pawan Goenka, and Hyundai Motor India's Director for Marketing, Mr Arvind Saxena.

Carmakers have been worried since last year that the Government would increase excise duty on diesel cars to check the sharp rise in demand of such models. Higher tax on diesel cars was expected in the Budget in March, but that did not happen.

“With sales already slowing down on higher petrol prices, any higher taxes on diesel cars would have a very negative impact. We need a clear policy so that we can know if we need to invest more on diesel engine capacity,” an industry executive said.

While Hyundai is mulling a new diesel engine plant, Maruti has committed Rs 1,700 crore to double diesel engine capacity to six lakh units over two years.

>roudra.b@thehindu.co.in

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