When Indian Union Budget of 2012-13 was announced in India, Indian automakers got a mixed bag, on one hand there was an across the board excise Duty hike and on the other hand these was a relief that no special Excise on Diesel vehicles was announced. Though time and again there have been proposals of additional tax of Diesel cars and SUVs to compensate for the cost of the subsidized diesel fuel, practically implementing it is still not very acceptable at many levels.
For past two years or so, Hyundai India, which is number two domestic car maker and number 1 exporter of cars from India, is working on its plans to set up a Diesel engine plant in India. At present the diesel engines of Hyundai India Diesel cars are imported from the Korean plants of Hyundai, however with increase in demand for Diesel fuel cars in India, Hyundai India wanted to go for local assembling of the engines for Hyundai India cars. Also with local assembly of Diesel engines in India, there was ample scope to make small capacity diesel engines for small cars like Hyundai i10 which is awaiting a diesel version in India for a long time.
After the Union Budget Hyundai India announced that it has resumed work on development of Hyundai India diesel plant which was on hold for many months because of the government policy on special tax on Diesel cars which was not announced in the budget. But now in July 2012, Hyundai India has again put a hold on its plan for the Diesel plant as there is a hike in prices of Diesel expected in July 2012 soon after presidential elections in India.
A senior official from Hyundai India as confirmed in a media interaction that they are closely monitoring government policies in India and they may take further decisions based on the new dynamics of Indian markets in coming time. As of now Hyundai India has again stopped its developments on the Diesel engine plant in India and it will continue to meet the increased diesel engines demand in India for its popular Diesel cars by importing the diesel engines built in parent plant in Korea.
We are expecting to hear a price hike in Diesel soon, there may also be partial or total decontrol over the diesel prices in India which means that like petrol prices, Diesel prices in India may also be revised more frequently. There may also be a simple hike by few rupees pre litre, the picture is not entirely clear but it will be clear in coming week or so. We will keep you posted on latest developments, stay tuned to Car Blog India for latest updates.