Phase out diesel or face taxes: Gadkari alert hits auto stocks

No tax proposal under active consideration currently, clarifies Union minister

- Alisha Sachdev

The spectre of an additional tax on diesel vehicles rattled shares of top automakers on Tuesday before an official clarification that there was no such active proposal before the government.

Earlier in the day, Union minister for road transport and highways Nitin Gadkari told an industry gathering that he would consider proposing an additional pollution tax on diesel engines if the industry doesn't transition away from the hazardous fuel quickly enough.

However, the minister later issued a clarification that said, It is essential to clarify that there is no such proposal currently under active consideration by the government, and it is imperative to actively embrace cleaner and greener alternative fuels. These fuels should be import substitutes, cost-effective, indigenous, and pollution-free.

Shares of companies such as Tata Motors Ltd and Ashok Leyland Ltd the country's largest and second-largest commercial vehicle makers, respectivelyand Mahindra & Mahindra Ltd, which sells nearly one in two diesel passenger vehicles in the country, fell in intra-day trading. On a day the BSE Sensex index rose 0.14%, Ashok Leyland fell 2.68% to ₹179.85, Mahindra & Mahindra 1.55% to ₹1,557.60 and Tata Motors 2.19% to ₹620.80.