Rising fuel prices may dampen auto sales this year

Rising fuel prices may dampen auto sales this year

5th Apr 2018 7:00 am

Government unlikely to reduce excise duty to ease rising fuel costs, which have been following global oil prices.


The Indian automobile industry is firing on all cylinders. Be it is the passenger vehicle (PV), the commercial vehicle (CV) or the two-wheeler segments, they all have reported robust sales for the fiscal year just-ended March 31, 2018.

However, vehicle manufacturers could likely face a sales speed breaker in the form of rising fuel prices. Dynamic pricing or daily fuel revision, which kicked in on June 16, 2017, continues to give considerable heartburn to motorists in India.

On April 2, motorists tanking up on petrol had to pay Rs 73.83 in New Delhi, Rs 76.54 in Kolkata, Rs 76.59 in Chennai and Rs 81.69 in Mumbai, which is also a four-year high for the financial capital. And those who fill diesel had to shell out Rs 64.69 in New Delhi, Rs 67.38 in Kolkata, Rs 68.24 in Chennai and Rs 68.89 in Mumbai. The high prices for the fossil fuels seem likely to stay for some time.

Meanwhile, the government is unlikely to make any immediate reduction in excise duty to cushion the rise in global oil prices. According to PTI, when Finance Secretary Hasmukh Adhia was asked whether a second round of excise duty cut was in the offing, he said, "Not as of now. Whenever we review it, we will let you know."

Oil Minister Dharmendra Pradhan said the government is keeping a close eye on international prices but said there is no going back on free market pricing. He said consumers will benefit if petrol and diesel are brought under Goods and Services Tax (GST) regime at the earliest.

"We are concerned (about the impact on consumers). We are keeping a close eye on the developing international oil scenario," Pradhan said at an event organised to mark the launch of / BS-VI (Euro-VI) grade petrol and diesel in the national capital. However, he did not offer any hint of a government intervention like cutting excise duty to give relief to consumers.

The government, he said, had cut excise duty on petrol and diesel by Rs 2 per litre in October and some states had followed it up with a reduction in VAT (Value Added Tax). "When there is a pricing issue, states should respond and cut VAT," he said.

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