After mining licences, Jairam Ramesh’s green crusade has now declared war on luxury SUVs. On Friday, the environment minister said the presence of such cars on Indian roads was “criminal”, given their emission patterns, and called for an overhaul of the subsidy on diesel to discourage their use. Such subsidies, he said, helped owners of the “BMWs, the Benzes and Hondas”, instead of farmers.
Ramesh should instead blame India’s increasing purchasing power, and the growing strengths of the country’s auto market. Cumulative volume growth in the luxury car segment over the last two years has been around 40%. This growth can hardly be attributed to a long-standing subsidy. In fact, luxury car makers are increasingly assembling units in India, leading to tax savings and lower priced cars.
We commend the minister for his concerns. But perhaps it’s time he’s reminded of the power of the market.