Scrappage Policy may boost auto sales by 30%

The much-anticipated vehicle scrappage policy is in its final stage of the draft and auto experts are expecting the new law to boost the sales and production of vehicles as well as increase the quality standards of the same.

Society of Indian Automobile Manufacturers (SIAM), the apex body for the automobile industry, on Wednesday said that the scrappage of old, poor performing vehicles should be carried out in a responsible manner with equal participation from auto manufacturers, vehicle owners, (scrappage owners) and the government.

Shrikant Deshmukh, Chairman, SIAM Recycling and Materials Group, said, "This can contribute to increase in amount of renewable substances as well as reducing the waste volumes. Considering all this, the developments on the regulatory norms are also welcome from the government. Particularly, SIAM recycling group, we always support these initiatives. We are working in close coordination with the ministry to provide necessary support on this initiative."

At the 16th lecture on Indian Vehicle Scrappage Policy 2021: Features and Implementation Planning, Joint Secretary, Ministry of Road Transport and Highways (MoRTH), Amit Vardhan appealed to SIAM to consider a five percent subsidy on new car purchases once the policy is implemented.

"This is a major big bang policy which will boost the auto sector sales. It is projected that the sales may go up as much as 30 percent, from the current turnover of Rs. 4.5 lakh crores, there will be an increase, say, about Rs 8 to 10 lakh crores. It has the potential to create immense employment, about 35,000 jobs may be created with the infrastructure and the boost in increasing sales," the Joint Secretary, MoRTH said.

Incase, of personal vehicles, Vardhan said, that the ministry has worked out savings that may

occur over the period of five years, that will accrue from buying a new vehicle vis-a-vi from old

vehicle to about Rs. 1,15,000. The calculation was presented considering factors such as maintenance costs and the value old scrapped vehicle to four-six percent. For commercial vehicles, the savings may amount to Rs. 8,00,000."There will be a substantial improvement in the ecosystem," he added. He said that the ministry envisages investment of about Rs. 10,000 crores in the auto industry.

On the environmental regulation under the vehicle scrappage policy, Vardhan said that pollutant cities in the country may charge upto 50 percent of road tax. For vehicles above the lifespan of 15 years, the fitness test and registration charges will be higher in comparison to new vehicles.

The scrappage policy will come into effect from April 1, 2023 for heavy commercial vehicles and from June 1st, 2024 for personal vehicles in a phase-wise manner. The policy will cover vehicles post its expiry period of the 10 to 15 years, after which it will have to undergo mandatory fitness tests and assessment.