NEW DELHI: The recently announced automobile scrappage policy will provide much needed respite to the automobile industry as sales of vehicles across categories can get a boost as customers are incentive to scrap their old vehicles, according to industry experts.

As per the new policy, commercial vehicles of more than 15 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. Also, government departments will also have to let go of their vehicles after they are used for fifteen years.

Customers and fleet owners will have to get their vehicles tested after a certain period to ascertain their fitness depending on the tailpipe emission and other parameters.

According to Saket Mehra, partner and automotive sector leader, Grant Thorton Bharat, the new policy has been welcomed by the automotive industry and is expected to provide the much-needed respite during an economic downturn.

“The policy will help vehicle buyers benefit from zero registration fee, rebate on road taxes, upgraded discounts on purchase of new vehicles and reduction on cost of maintenance. However, we believe that if the timeline for scrapping personal vehicles was pushed earlier, end consumers as well as OEMs (original equipment manufacturers) would have benefitted from it in the near term on a larger scale,” said Mehra.

He further added that raw material prices, especially steel, have significantly increased (around 30%) over the last six months, further pushing the production cost. With recycling of old vehicle metal, the production cost for new vehicle is expected to come down to an extent and allow rationalisation of production cost.

According to the ministry of road transport and highways, there are 17 lakh old medium and heavy commercial vehicles in India without a valid certificate. Also, the number of light motor vehicles older than 20 years is more than 51 lakh.

“The vehicle scrappage policy by the Central government is a significant step towards Atmanirbhar Bharat and will put India on the map. The incentives announced by the Government will not only help in removing unfit vehicles on the roads but also help in recycling, creating new job opportunities and above all it will prove to be a sustainable solution for the ongoing wrong practices of vehicle material scrappage,” said Uday Narang, chairman and founder, Omega Seiki Mobility.

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