The Minister of Road Transport and Highways (MoRTH) Nitin Gadkari says that a scrappage policy will be announced soon. Gadkari was speaking at the 59th Annual Society for Indian Automobile Manufacturers (SIAM) convention today and said that the government is working on introducing a scrappage policy as soon as possible. The announcement comes at a time when the auto sector is reeling through a major slowdown that has catapulted with over 300 dealers shutting shop, 15,000 job losses. Over one lakh jobs are said to be on the line, according to ACMA estimates.
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SIAM has been urging the government to formulate a scrappage policy to phase out older and polluting vehicles. This, in turn, is expected to create demand for new vehicles in what is the worst slowdown in the auto industry since 2009. The scrappage policy is part of the stimulus package requested by OEMs for the auto sector's revival, in addition to a 10 per cent reduction in the GST rates. The auto sector currently attracts a GST of 28 per cent, apart from cess.
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SIAM has been urging the government to formulate a scrappage policy to phase out older and polluting vehicles
Previous reports have also indicated that inter ministerial discussions are underway on the scrappage policy for building measures in both formal and informal scrapping sectors. At present, there are no formal channels for scrapping vehicles in India. Automaker Mahindra & Mahindra did set-up a scrappage unit outside Delhi. The government also needs to devise incentives for those choosing to scrap vehicles
Inter ministerial discussions underway indicate that the government is considering capacity building measures in both the formal and informal scrapping sectors. People privy to the discussions said that there is also a need to harness the strengths of the informal scrapping sector which already exists. In addition, the government would also have to setup fitness centres for both passenger and commercial vehicles to certify vehicle fitness, as part of the scrappage policy. Globally, vehicles are needed to undergo fitness tests after a certain period across different markets.
In addition, Nitin Gadkari also said that government has suggested on reducing taxes on hybrid cars as well to five per cent. Suggestions have also been made to reduce taxes on fuel for a short period to the Finance Minister. Gadkari also said that suggestions have have been made to FM if there can be an export incentive for the auto sector.
