Voluntary Scrapping Policy Can Generate Additional 5 Lakh Vehicle Sales When Implemented

Digital86

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posted on 3 years ago — updated on 1 second ago

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The new voluntary scrapping scheme will be based on the mandatory fitness test of vehicles which will undergo a test in automated fitness centres.

The Union Minister for Road Transport and Highways Nitin Gadkari today said that the Ministry of Road Transport and Highways (MoRTH) will be declaring the Scrappage Policy in 15 days. His announcement came after Finance Minister Nirmala Sitharaman’s budget 2021 speech where she announced the Voluntary scrapping policy.

As per the FM’s speech, the scrapping scheme will be based on the mandatory fitness test of vehicles which will undergo a fitness test in automated fitness centres. The timeline fixed for fitness test is 20 years for personal vehicles and 15 years for commercial vehicles.

Federation of Automobile Dealers Associations (FADA), the apex body representing automobile dealers across India predicts that as much as 6 lakh old vehicles are running on the roads currently if 1990 is taken as a base year. As per the data by FADA, approximately 37L CVs and 52L PVs eligible for voluntarily scrappage. As an estimate, 10% of CV and 5% of PV may still be plying on road.

FADA President Vinkesh Gulati said – “FADA is happy to note that the Hon’ble Finance Minister has finally announced the much awaited Scrappage Policy, though voluntary to phase out old vehicles. If we take 1990 as base year, there are approximately 37L CVs and 52L PVs eligible for voluntarily scrappage. As an estimate, 10% of CV and 5% of PV may still be plying on road. We still need to see the fine prints to access the kind of incentives which will be on offer and thus have a +ve effect on retail.

The 6,575 km Highway works proposed in Tamil Nadu, Kerala, West Bengal and Assam and another 19,500 km work for Bharat Mala project will definitely add fillip to much needed revival of Commercial Vehicles especially M&HCV segment.

Government’s reduction of customs duty on steel products to 7.5% will benefit Auto OEMs. We hence expect the benefit to trickle down to end customers thus helping in boosting of demand.

While we expected disposable income for individuals to increase with enhancement of IT slabs and depreciation benefit on vehicles for individuals, the same has not been taken into consideration."

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