Diesel pricing: Auto majors put Rs 3k crore investments on hold
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12/03/2012
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Tribune (New Delhi)
Even as car sales in India rose an annual 13.1 per cent in February, lack of clarity on the part of the government in the diesel sector has forced a number of automobile manufacturers in holding back their investments. Not only is there a lack of clarity on diesel pricing, but the possibility of a cess on registration of new diesel cars being on the way has further put the industry under pressure.
The Society of Indian Automobile Manufacturers (SIAM) said Monday while there seemed to be some kind of a recovery in the auto sector, especially cars, the confusion over diesel pricing has resulted in automakers, including the country’s largest car manufacturers — Maruti Suzuki India and Hyundai Motors India — holding up investments of over Rs 3,000 crore in India.
Talking to reporters here, SIAM director general Vishnu Mathur, while releasing the monthly sales figures for the industry for February, said: "Many of our members are still unclear whether they should invest on diesel technology in India as there’s no clarity on how the fuel will be priced in the future. This has resulted in over Rs 3,000 crore investments being held back".
Not going into specifics, he said the firms that had held back investments included Maruti Suzuki, Hyundai, Ford India, Tata Motors and General Motors India. All of these companies have been looking to put up new diesel engine manufacturing plants specially, in the wake of a major spurt in the sales of the diesel cars.
At present petrol prices are deregulated but diesel prices are still decided by the government, which provides subsidy on the fuel.