Need stable policy, sudden changes affect investments: Honda tells Indian govt


Japanese car major Honda wants a stable road map for automobile industry in India, amid uncertainty over big diesel cars and SUVs following Supreme Court’s verdict, saying sudden changes in policy affect plans involving large investments.

“As an industry we expect stability, transparency and clear road map as far as policies are concerned. It affects our confidence when suddenly the playing field changes altogether.
Give us a road map and then stick to it as large investments are involved,” Honda Cars India Senior Vice-President (marketing and sales) Janeshwar Sen told PTI.
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Honda Cars India, which was manufacturing petrol cars primarily in the country till a couple of years back, invested heavily in diesel technology when demand began to shift towards diesel cars due to wide gap in petrol and diesel prices.

In 2013, the company had announced an investment of Rs 2,500 crore. Around Rs 400 crore of that investment went into creation of diesel engine manufacturing infrastructure.
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When asked about company’s strategy if the Supreme Court levied extra cess on diesel cars, Sen said: “If that happens, everybody will have to adhere to the judgement. Even we will have to adapt according to the market conditions. We will make what market will demand.”

Pollution from cars constituted just a small part of the entire problem and need is to look into the matter in a cohesive manner, he said.

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“Cars are just a small part. Are we really looking at real causes of air pollution?” he asked.

The auto industry is facing a slew of challenges. In December last year, the Supreme Court banned registration of diesel-run SUVs and cars having engine capacity beyond 2,000 cc in Delhi and NCR. The apex court will take up the matter on on May 9.

Earlier, the government had announced infrastructure cess of 1% on petrol/ LPG/CNG driven vehicles of length not exceeding 4 meter and engine capacity not exceeding 1,200cc.

Singling out diesel vehicles in the aftermath of pollution problems in the national capital, the government had also imposed 2.5% cess on diesel vehicles of length not exceeding 4 metre and engine capacity not exceeding 1,500cc, while higher engine capacity and SUVs and bigger sedans were slapped a cess of 4% on the value of the car.

Further, the government proposed in the Budget “to collect tax at source at the rate of 1% on purchase of luxury cars exceeding value of Rs 10 lakh”.

Earlier on similar lines, Maruti Suzuki India Chairman RC Bhargava and industry body SIAM have also questioned singling out the auto industry for the entire air pollution scenario.