The proposed vehicle scrappage policy is expected to boost sales of automobile manufacturers leading to higher production capacity utilization
The new vehicle scrappage policy, announced by the Centre on Monday, will help reduce pollution by removing old vehicles and will help turnaround the fortunes of struggling automotive industry by boosting sales, said senior executives at automobile manufacturing companies and their component making firms.
According to the new policy, commercial vehicles of more than fifteen years and passenger vehicles of more than twenty years will have to be mandatorily scrapped if they don’t pass fitness and emission tests. Also, customers who voluntarily scrap their vehicles will get a 15-25% rebate on road tax and complete waiver of registration fees on the next new vehicle purchase. Automobile manufacturers will also have to offer a discount of 5% against a certificate of vehicle scrapping.
“The guidelines will prove to be a boon in the long run, exciting the customers to newer and efficient vehicles and in turn help India elevate to becoming the hub of automobile manufacturing, corroborating the coveted ‘Make in India’ initiative. We strongly believe this policy will kick start the revival of the Indian auto sector and the overall economy ” said Venkatram Mamillapalle, Country CEO & Managing Director, Renault India.
He added that the new rules will bring the Indian automotive industry on a par with international standards, besides offering a much-needed reprieve for auto, steel, and electronics industry that have been battered by the pandemic.
“The benefits to environment and safety of a sound system of removing unsafe or unfit vehicles from the road have been felt strongly by all stakeholders. The most important step is to build an infrastructure of testing and scrapping centers fast all over the country and SIAM will work on this front with the government. Mandatory scrapping of +15 year old government vehicles from 1st April 2022 is a step in the right direction,” said a spokesperson of Society of Indian Automobile Manufacturers, a representative body of automakers.
The automobile industry had been asking for an incentive-based vehicle scrappage scheme for years, to remove old vehicles from the roads and generate demand for new vehicles which has remained subdued for over the last two years.
“This incentive-led announcement will lead to reduction in the pollution levels in the long run and boost the demand for new and environment-friendly vehicles especially in the personal mobility segment.