New Delhi: India’s new vehicle scrappage scheme is likely to boost sales of heavy and medium commercial vehicles that had been in the contraction zone since 2018.

Automakers have been struggling with falling sales of commercial vehicles as a result of economic slowdown triggered by the bankruptcy of IL&FS and revised load carrying norms which led to more than 20% increase in freight carrying capacity of trucks. Covid-19 pandemic further impacted sales of trucks and busses.

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The auto industry has been urging the union government for long to come up with an incentive-based scrappage scheme to boost sales of heavy vehicles.

“DICV (Daimler India Commercial Vehicles) has long advocated for a well-designed, incentivized ‘end of life’ policy that boosts demand, improves safety, and supports the environment by encouraging CV owners to exchange their older vehicles for new ones, meeting current emissions norms. Only a joint effort by government, industry and the customer can result in a scrappage policy that offers true safety, economic and environmental benefits,” said Satyakam Arya, managing director and chief executive of the company.

The new rules will need commercial vehicle fleet owners to abandon or scrap their vehicles after 15 years if they don’t meet the fitness or emission criterion laid by the government. This will generate new sales for Original Equipment Manufacturers like Tata Motors, Ashok Leyland and others.

“Provisions in the policy such as compulsory fitness certificate, dis-incentivizing re-registration of commercial vehicles after 15 years and private vehicle after 20 years, would encourage removal of old and polluting vehicles from the system. Largely, it addresses intents of all the stakeholders from low import bill for scrap and crude oil, job opportunities for MSMEs, possibility of upside in new vehicle sales for OEMs, low operation cost for vehicle owners, safer and cleaner vehicle for consumers and a sustainable environment for all,” said a spokesperson of Tata Motors, country’s leading commercial vehicle manufacturer.

The union government on Thursday announced the much-awaited vehicle scrappage scheme for both personal and commercial vehicles to remove old vehicles that contribute to increasing pollution levels in Indian cities. 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 the fitness and emission tests.

“This fine balance should help in driving old vehicles out of Road leading to reduction in pollution levels and driving demand for new vehicles across all the segments. This announcement will also lead to creation for more scrapyards in the country and effective recovery of waste from old vehicles,” said Rajeev Singh, partner and leader, automotive, Deloitte India.

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