The country’s largest carmaker Maruti Suzuki India Limited is planning to install a second diesel engine plant in India in order to account for the increasing demand for diesel engines and reduce dependency on Fiat India for its diesel engines sourcing. The company is however waiting for the government to clarify its position on the imposition of a punitive tax on diesel powered cars in the next national budget. The tax will be aimed at discouraging the Indian car buyers from purchasing diesel run cars and from using diesel, which is a subsidized fuel, for private purpose.
According to Mr. R.C. Bhargava, Chairman of Maruti Suzuki India, the company subsidiary Suzuki Powertrain India Limited is currently functioning at its full capacity. Expansion options will have to be sought if the demand for diesel cars goes higher. Currently, given the price difference of Rs. 30 per liter between petrol and diesel, more and more car buyers are inclined to purchase diesel powered cars.
The scenario could change if the government decides to impose a tax or excise duty on diesel-run car which may compel buyers to reconsider the diesel car advantage and the running costs before purchasing a new car.