India Inc welcomes vehicle Scrappage Policy

India Inc on Thursday welcomed the Centre’s automobile Scrappage Policy.

Industry players, as well as sector specialists, said the move will enable faster growth for the industry and will be an environment-friendly move.

In a statement, the Society of Indian Automobile Manufacturers (SIAM) said: “The benefits to the 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 centres 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.”

The policy, which has been introduced in India for the first time, mandates compulsory fitness certificate, dis-incentivising re-registration of commercial vehicles after 15 years and of private vehicles after 20 years.

It is expected to lead to low import bill for scrap and crude oil, job opportunities for MSMEs, possibility of upside in new vehicle sales for OEMs, and low operation cost for vehicle owners.

“We are optimistic and look forward to seeing how various provisions of this policy encourage consumers to voluntarily come forward and scrap their old and unfit vehicles,” a Tata Motors spokesperson said.

“We will await the actual release of the policy to go through the fine print and the nuances, in order to understand its impact on the industry, at large and work closely with all stakeholders, towards the larger objective of the policy, set by the government.”

Finance Minister Nirmala Sitharaman had announced the introduction of a scrappage policy during the FY22 budget speech. The concept and the outline of the policy was unveiled by Road Transport & Highways, Micro, Small & Medium Enterprises Minister Nitin Gadkari.

“Scrappage value of vehicle in range of 4-6 per cent of the ex-showroom price, rebate of up to 25 per cent for PV and 15 per cent for CV by state governments, a 5 per cent discount from OEMs on a new vehicle and registration fee being waived off will definitely help to excite the customer and make him scrap his old vehicle,” Federation of Automobile Dealers Associations (FADA) President Vinkesh Gulati said.

“It will also revive the ailing CV segment and in turn will boost state exchequer’s revenue on sale of new vehicles.”

Crisil Ratings Senior Director Anuj Sethi said: “The new Voluntary Vehicle-Fleet Modernisation Programme, also called the Vehicle Scrapping Policy, can help in three ways: one, lower the cost of passenger vehicles by 8-10 per cent for most segments; two, afford replacement of older, more-polluting passenger vehicles; and three, increase the availability of key raw materials such as steel, copper and aluminium, which can be recycled to lower the cost of production of new vehicles.”