India is scrutinising a proposed move by Chile to impose an environment tax on diesel vehicles imported into the country, and may formally oppose it.
South Korea, a major exporter of diesel cars to the country, has already lodged a complaint with the Chilean Government.
“While our exports of diesel vehicles are not as much as South Korea’s, Chile has a lot of potential and such a tax would hamper future growth prospects of our companies in that market,” a Government official told BusinessLine .
An environment tax Bill, which will lead to the imposition of the new tax, has been passed in Chile’s lower house of Parliament and is pending in the Senate. It will become law if Parliament clears it in October. The tax could increase the prices of diesel cars in Chile by an approximate 30 per cent, as per industry calculations. While earlier the country was planning to impose the tax only on imported vehicles, following opposition from foreign companies, it has now been decided that the tax would be on domestic vehicles as well. According to the Society of Indian Automobile Manufacturers it is not correct to impose a tax that is technology-specific, and Chile should impose tax on diesel, rather than on vehicles.