Road minister Nitin Gadkari proposes and disposes.

Soon after threatening to slap a 10 per cent pollution tax on diesel vehicles, he backtracked on Twitter — but not before sending oil and auto stocks on a dizzy ride on the bourses.

Auto executives stressed the need for more incentives to be electric, hydrogen and other alternative fuels rather than increase taxes.

Speaking at the annual convention of automobile manufacturers body SIAM on Tuesday, Gadkari said rising pollution level is a serious health concern and there is a case for increasing taxes to dissuade the sale of diesel vehicles.

"I am requesting the finance minister to impose an additional 10 per cent GST on diesel engines/vehicles. This is the only way to phase out diesel vehicles," he said.

But soon after he took to X, formerly known as Twitter, to clarify the government's position.

"It is essential to clarify that there is no such proposal currently under active consideration by the government," he said.

He emphasised that there was a need to embrace cleaner fuels to cut emissions.

Shares of auto companies fell sharply and later recovered some lost ground after the minister's tweet.

M&M, which hit a low of Rs 1,513, recovered to Rs 1,557.60 on the BSE but was still down 1.55 per cent.

Ashok Leyland closed at Rs 179.85, down 2.68 per cent, after braking to a low of 176.90 earlier.

Maruti Suzuki recouped all its losses to end at Rs 10,507 after hitting a low of Rs 10,396.

Tata Motors ended at Rs 620.80, off its day's low of Rs 615.60. This stock was down 2.19 per cent.

The stocks of Hindustan Petroleum Corporation Ltd fell 5.3 per cent, Bharat Petroleum Corporation Limited declined 4.11 per cent and Indian Oil Corporation dipped by 3.78 per cent

Veejay Ram Nakra, chief executive officer for the automotive division of Mahindra and Mahindra, told TV news channel ET Now that any change in duty structure “will certainly have an impact on the volume of sales”.

"As the emission regulations keep tightening, the cost of acquisition will keep increasing, and this process (the decline in diesel vehicle percentage) will be much faster," Maruti Suzuki India senior executive officer (marketing & sales) Shashank Srivastava said.

Most manufacturers have announced that they will move out of diesel, he said.