Automakers in India have welcomed the INR5 (US$0.09) increase in the price of diesel to INR46.95 from INR41.32 a litre.
The market driven hike in the fuel prices has nonetheless made automakers cautious as the economy is weak and the hike may also add to the existing burden of inflation, the Financial Express reported.
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“It is a good decision but the INR5 per litre hike will hurt the consumer and market. We have been saying that diesel prices should be corrected in a staggered manner,” Society of Indian Automobile Manufacturers (SIAM) senior director Sugato Sen said.
Mahindra & Mahindra autos chief executive Pravin Shah said: “This is a much-debated and much-awaited decision. For the auto industry, it is a welcome one as diesel needs to be priced at market value.
“However, for the overall economy it has come at a wrong time. The overall sentiment is weak and this will further add to inflation”.
General Motors India vice-president P Balendran said: “In the long term when the price difference between petrol and diesel fuels reduces, obviously sales of petrol vehicles will increase. However in the short-term, the diesel price hike will not have any impact on boosting sales as the market continues to be subdued.”
