Diesel cars get costlier in Delhi

The budget presented on Tuesday will also make tobacco products, furnishings, suitings and sweetmeats costlier for Delhiites. Chief minister Shiela Dikshit announced Delhi Metro's ambitious Phase-III which envisages adding another 103 km to the network at a cost of Rs 32,000 crore that will begin this fiscal with a Rs 1,071 crore allocation. 

The budget proposed an additional 25% levy on existing state taxes on diesel-propelled vehicles specified in the schedule-I of the Motor Vehicle Taxation Act 2004. "...many studies have pointed out that in spite of the use of CNG in all public transport vehicles and also by many private vehicles in Delhi, the growing number of diesel vehicles is adding to air pollution," she said justifying the tax. 

The National Capital Region is the largest market of cars sold across the country, accounting for about 15% of new vehicles are sold every year. Diesel propelled vehicles account for about 30% of the total sales and every year around 8-lakh such vehicles are sold annually across the country. 

The new policy is likely to impact the sale of popular diesel vehicle such as Maruti Swift, Tata Indica and Mahindra Scorpio as the higher tax component will make them even more expensive. Diesel propelled vehicles are already about 15% more expensive than petrol ones because of taxes and engine technology that uses higher proportion of components and moving parts. 

"It won't be ideal to tax a particular fuel, which is becoming popular by virtue of higher mileage and faster acceleration," a senior Maruti Suzuki executive said. The Society of Indian Automobile Manufacturers' said that diesel is not a dirty fuel and any change in policy will impact the segment customer sentiment in the market. 

Dikshit proposed to give relief to cycles, the "aam-admmi's preferred mode of commutation" by removing value added tax, or VAT, on bicycles having an MRP of upto Rs 3,500. She said cycling was a healthy and non-polluting mode of transportation which "needs encouragement and protection of the government".