New Delhi:

Union Transport Minister Nitin Gadkari today proposed a 10% GST hike on diesel vehicles and generators in order to cut down the rising air pollution.

Warning car manufacturers, the Union minister said that it would become “difficult” to sell diesel vehicles after the proposed “pollution tax.”

“Say goodbye to diesel… Please stop making them, otherwise we will just increase the tax so much that it would become difficult to sell diesel cars,” Mr Gadkari said while speaking at 63rd Annual SIAM convention in New Delhi.

The minister will submit a letter to the Union Finance Minister Nirmala Sitharama later today proposing an additional 10% GST be put on diesel-powered vehicles and generators.

Calling diesel a “hazardous fuel”, the minister said that the rising demand has led to India relying on fuel imports. Mr Gadkari also asked carmakers to reorient their manufacturing to focus on environment-friendly fuels like ethanol and green hydrogen — a move which could to facilitate the introduction of more electric vehicles on Indian roads.

The number of diesel cars has fallen drastically with carmakers like Maruti Suzuki and Honda halting manufacturing of diesel passenger vehicles, he said. The decision is likely to result in a sharp rise in the cost of diesel vehicles, which constitute most of the commercial vehicles in the country.

After Mr Gadkari’s comments, Tata Motors, Mahindra and Mahindra and Ashok Leyland’s shares fell between 2.5% and 4%.

Currently, automobiles attract a 28% GST along with an additional cess ( ranging from 1% to 22% as per the vehicle type). SUVs attract the highest tax — 28% GST coupled with 22% cess