Petrol price hike fuels demand for increase in duties on diesel cars

Despite a cut in petrol prices on Saturday, many petrol car owners are resenting the fact they are being targeted to reduce the subsidy deficits. Subsidy on petrol makes up only a small part of the overall deficit as compared to those on diesel, kerosene and LPG.

The hike in petrol prices is making buyers increasingly opt for diesel vehicles which, according to estimates, make up about 15 per cent of the overall diesel consumption in the country.

The Finance Ministry is now considering a proposal to hike excise duty on diesel cars, a senior government official said on Monday.

Earlier, the oil ministry had sought additional excise duty on diesel cars in order to discourage consumption of subsidised diesel.

Excise duty on diesel cars with engine capacity under 1,500 cc is 12 per cent and the duty goes up to 24 per cent if the car's length exceeds four metres.

Diesel vehicles of engine capacity of over 1,500 cc and length exceeding four metres and attract an ad valorem duty of 27 per cent and a fixed duty of Rs 15,000.

(With PTI inputs)