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Personal cars account for 0.6 percent of India's diesel consumption

By Motortrend India Staff   |   26 December,2011

They may be branded as villains by the environmental lobby, but personal cars consume a paltry 0.6 percent of the diesel consumed in the country, an internal Planning Commission note said.

The note shows that personal cars are the lowest consumers of diesel, a far cry from the charges that they benefit the most from the subsidy that the government accords to the fuel. According to the note, goods vehicles consume the maximum 37.9 percent while agriculture accounts for 18.8 percent. Buses, another crucial consumer of the fuel, account for 6 percent.

The note, which has been shared with auto industry body Society of Indian Automobile Manufacturers (Siam), is in stark contrast to Kirit Parikh Committee report that pegs the consumption by passenger cars at a staggering 15 percent of the total diesel usage. However, while the 2010 Parikh Committee report attributes a higher percentage to passenger cars, it does not further divide it in sub-segments like taxis, jeeps/ multi-utility vehicles etc.

The Planning Commission note pegs the usage by taxis at 2.1 percent and jeeps/MUVs at 2.5 percent. Three-wheelers account for 3.6 percent, power 6.8 percent, railways 3.7 percent, industry 5.6 percent and others 12.5 percent.

The note says that the share of transport sector (private and public) in diesel consumption has come down to 56 percent in 2010-11 from 59 percent in the previous two years. The fall in consumption of the fuel, despite its rising popularity, is being attributed to the rising refinement of diesel engines and the high fuel efficiency they offer.

The report, yet to be made public, puts a question mark on talks that diesel vehicles should be taxed more than petrol vehicles as they benefit from the subsidy the government offers to keep diesel prices low. “When the overall usage of diesel by personal cars is so low, at less than 1 percent, where is the argument to tax them higher? The fact is that personal diesel cars are not the major beneficiaries of the government subsidy, as is made out to be,” says Vishnu Mathur, director general of SIAM

Currently, small cars in India attract an excise duty of 10 percent while big cars are taxed at 22 percent. Ahead of the budget, there is speculation that the government may hike the excise duty on diesel cars to “make up for the subsidy” their owners receive on account of the lower price of the fuel. The Delhi government already imposes extra registration tax on diesel vehicles, though it attributes this to concerns on environment pollution by diesel cars.

The car industry has already voiced concerns against any hike in the tax on diesel cars and said this would lead the industry further into a slowdown.

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