The automobile industry has written to the government that it’s concerned about plans to levy additional excise on diesel cars . This, companies say, will add to the woes of car makers struggling to persuade Indians to buy more of their vehicles. The government, for its part, is looking for ways to correct a distortion that has led to diesel-run cars benefiting from a subsidy aimed at farmers.
The additional excise plan is a short-term fix that will seemingly ruffle the least feathers. Taking the easy way out is something all governments specialize in, especially when trying to correct past mistakes could cause a political explosion. There have been calls to make efforts to bring diesel prices in closer alignment with market rates, but everyone knows that’s not going to happen. Car makers, including those that have invested in diesel engine plants, should prepare accordingly.