Scrappage policy in last lap, to focus on commercial vehicles
NEWDELHI/MUMBAI: India’s vehicle scrappage policy, which is awaiting its final clearance from the Union cabinet, would focus on eliminating the fleet of old polluting commercial vehicles plying on the country’s roads, said a senior government official.
“The policy has been finalized and we are waiting for the cabinet’s approval, which is expected soon,” said a second government official. Both the officials declined to be named.
The second official said the proposed policy would seek to revive the ailing commercial vehicle industry—a key barometer of economic activity and freight movement.
“The idea is to take off old, polluting ones off the roads as they are major contributors towards pollution.”
The policy would entail a manifold increase in the renewal of registration fees of vehicles older than 15 years to discourage the use of older polluting vehicles, including passenger vehicles, the official said.
The proposed policy is seen as an attempt by the government to boost automobile demand, which has been hit by weak consumer demand amid a slowdown in the broader economy. This economic slowdown has forced several companies to temporarily shut factories, lay off contract workers and offer hefty discounts to clear inventory.
In August, finance minister
Nirmala Sitharaman proposed several steps to revive the automobile sector, including the scrappage policy, aimed at increasing production levels and capacity utilization at factories.
The medium and heavy commercial vehicle segment is the worst-hit following the creation of extra load-carrying capacity of trucks last year with the introduction of axle load norms. This was followed by a general slowdown in key sectors such as real estate, infrastructure, mining and others.
According to the Society of Indian Automobile Manufacturers (Siam), wholesales or factory dispatches of medium and heavy-duty trucks fell over 41% year-on-year during April-November. During the same period, the commercial vehicle industry posted a 22% decline in sales.
Meanwhile, truck makers have resorted to offering heavy discounts to clear their inventory of Bharat Stage IV (BS IV)-compliant vehicles.
Mint had earlier reported that the two largest commercial vehicle makers, Tata Motors and Ashok Leyland, have been offering heavy discounts of up to ₹8 lakh on 40-49 tonne trucks even as smaller companies toil for customers.
“While the automotive industry is still waiting for the vehicle scrappage policy, the draft guidelines on AVSF (authorized vehicle scrappage facility) by MoRTH (ministry of road transport and highways) are a welcome move to reduce in-use emissions and drive fleet modernization in India,” said a spokesperson for Tata Motors. “The guidelines outline clear direction for setting up authorized vehicle scrappage facilities, which will ensure environment-friendly recycling and disposal of vehicles and hazardous materials.”