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Union Budget 2021-22| New Vehicle Scrappage Policy: Indian Auto Industry reactions

Credits: www.financialexpress.com

The Union Budget for the upcoming financial year is said to include the much-awaited vehicle scrappage policy to help generate demand for new vehicles. The Indian automotive industry has welcomed this new move.

The Indian automotive industry has welcomed the new proposal of the old vehicle scrapping provision to be included in the Union Budget 2021-22. The new vehicle scrappage policy is said to help boost demand for new vehicles after removing old unfit vehicles currently plying on Indian roads. Additionally, it is expected to help reduce air pollution caused by older vehicles. This is a compilation of how automotive component manufacturers, union bodies and other involved parties have reacted to the new announcements made by India’s finance minister – Nirmala Sitharaman.

Kenichi Ayukawa, President, Society of Indian Automobile Manufacturers (SIAM)

In a visionary budget, the government has adopted an expansionary stance with a thrust on infrastructure building with measures for efficiency improvement and increasing competitiveness. Good macroeconomic growth will translate to good auto sector demand. Specifically, the vehicle scrappage scheme has a good intent and the auto industry would be keen to work with the Government on suggestions for maximizing benefits to environment and society.

Vinkesh Gulati, President, Federation of Automotive Dealers Association (FADA)

“FADA is happy to note that the Hon’ble Finance Minister has finally announced the much-awaited Scrappage Policy, though voluntary to phase out old vehicles. If we take 1990 as the base year, there are approximately 37L CVs and 52L PVs eligible for voluntary scrappage. As an estimate, 10% of CV and 5% of PV may still be plying on road. We still need to see the fine prints to access the kind of incentives which will be on offer and thus have a +ve effect on retail.

The 6,575 km Highway works proposed in Tamil Nadu, Kerala, West Bengal and Assam and another 19,500 km work for Bharat Mala project will definitely add fillip to a much-needed revival of Commercial Vehicles especially M&HCV segment.

Government’s reduction of customs duty on steel products to 7.5% will benefit Auto OEMs. We hence expect the benefit to trickle down to end customers thus helping in boosting demand.

While we expected disposable income for individuals to increase with enhancement of IT slabs and depreciation benefit on vehicles for individuals, the same has not been taken into consideration.”

Deepak Jain, President, Auto Component Manufacturers Association (ACMA)

“The vision of an Aatma-nirbhar Bharat enshrined in the Union Budget, coupled with the ‘Sankalp’ of ‘Nation-First’ will be the bedrock to propel us further as we redefine our economy in a post-pandemic world. Significant outlay for vaccination in the country will add to the confidence of a resurgent India.”

Announcements with regards increased spend on road infrastructure, voluntary scrappage policy, Research & Development and PLI among others, augur well for the automotive sector. Further, continued focus on building rural and agricultural infrastructure and prioritizing agriculture credit growth will have long-term positive impact on rural demand for vehicles.

Increase in basic customs duty on select auto components will encourage local manufacturing of such items. It is also heartening that the budget outlay for the MSME sector has been doubled compared to last year. The auto component industry is dominated by MSME and this will provide them the necessary succour as the industry recovers.”

Sohinder gill, Director General, Society of Manufacturers of Electric Vehicles (SMEV)

“We thank the Hon’ble Finance Minister for announcing the Scrappage policy, which would help in encouraging the adoption of greener vehicles. Though we are awaiting more details on the policy but hope that it would be designed in such a way that would automatically push the adoption of electric vehicles.

For Clean Air, setting aside an amount of Rs 2,217 crores for 42 urban centres with a million-plus population is a good move. The fund could be utilized to spread awareness about the benefits of using e-vehicles to the environment and its contribution to make the air clean.

The government’s plan for strengthening the public transport sector under PPP models with an outlay of  Rs 18000 crores for operating 20000 buses is encouraging for the EV industry. The scheme could strengthen the EV industry if more number of e-buses could be supported through the scheme. We urge the government to mandate procurement of E-Buses under the scheme which would help us fight the issue of air pollution.”