Voluntary scrapping policy receives thumbs-up from automobile industry

The automobile sector has welcomed Union Finance Minister Nirmala Sitharaman’s announcement of a voluntary scrapping policy for both commercial vehicles (CVs) and passenger vehicles (PVs). Most members of the industry, however, are awaiting further details on the ways the policy will be implemented.

A policy to phase out age-old vehicles has been a long-term demand of the automobile industry. Such a policy, members said, would not only boost sales, but also take care of vehicular pollution by taking old vehicles off the roads.

“We are separately announcing a voluntary vehicle scrapping policy, to phase out old and unfit vehicles. This will help in encouraging fuel-efficient, environment-friendly vehicles, thereby reducing vehicular pollution and oil import bills. Vehicles would undergo fitness tests in automated fitness centres after 20 years in case of personal vehicles, and after 15 years in case of commercial vehicles. Details of the scheme will be separately shared by the Ministry,” the finance minister said on Monday.

In 2016, the Ministry of Road Transport and Highways had circulated a draft policy for the setting up of a scrappage policy for vehicles of a certain age. The announcement was a culmination of consultation at various levels.

The move has been welcomed by the industry on the whole. Kenichi Ayukawa, president of the Society of Indian Automobile Manufacturers (SIAM), said that the industry would be keen on working with the government for maximising benefits. “Good macroeconomic growth will translate to good auto sector demand. Specifically, the vehicle scrappage scheme has a good intent and the auto industry would be keen to work with the Government of India on suggestions for maximising benefits to the environment and the society,” he said.

Prashant Girbane, director-general of the Mahratta Chamber of Industry Commerce and Agriculture (MCCIA), pointed out how the industry has been demanding an auto-scrappage policy for a long time. “A voluntary auto-scrappage policy would mean old vehicles (15 years for CVs and 20 years for PVs) would need to be scrapped and thereby, create demand for new vehicles. This will lead to additional production that will sustain and create additional jobs in the auto sector. It will also help in reducing pollution and helping the environment,” he said.

Citing industry figures, Girbane said that around 9 million vehicles could go off the roads by the fiscal year 2021-22 and 28 million, by 2025.

Suresh KV, president of ZF India, also welcomed the policy. “We welcome the announcement of a voluntary scrappage policy. This will induce the demand for new commercial vehicles and passenger vehicles. Although the scrappage policy is voluntary, this could be seen as a significant step in view of the fact that the scrappage would be dependent upon the fitness certificate. This policy backed up by an effective implementation plan would really boost the growth of the industry,” he said.