The Society of Indian Automobile Manufacturers (Siam) said that it supports any decision by the government to hike diesel prices in a phased manner, adding that there might be a short-term impact on vehicle sales.
For over a year, Siam has been lobbying against any proposal to increase taxes on diesel cars to compensate oil marketing firms for selling diesel at a subsidised price.
?Though the proposed price hike of diesel is quite steep, Siam would support the rationalising of price hike, and also insists that it be done in a manner which shouldn?t adversely affect consumers. It may affect the sales of vehicles for a short term but the elimination of price distortion will help the industry and economy in the long run,? a Siam statement said. The reaction follows media reports that said diesel prices will go up by R1 per litre every month for the next 10 months, quoting top oil ministry officials.
However, industry sources said that with elections next year, such a move is not likely in the near-term, because of a political impact. Prime minister Manmohan Singh has also pressed upon the need to increase prices of regulated fuel to reduce the burgeoning fiscal deficit and high subsidy bill.
Rising prices of petrol, after being deregulated in 2010, has led the price differential with cheaper diesel to creep up to over R30/litre at its peak.
