Automotive sector

Union budget 2021 | The automotive sector welcomes the vehicle scrapping policy

Major players in the Indian automotive sector have welcomed the Centre’s decision to separately announce a voluntary vehicle scrapping policy to phase out old and unsuitable vehicles.

When submitting the Union budget for 2021-2022, Finance Minister Nirmala Sitharaman said that the policy would help encourage fuel-efficient and environmentally friendly vehicles, thereby reducing vehicle pollution and the cost of oil imports.

The vehicles would undergo aptitude tests after 20 years in automated fitness centers in the case of personal vehicles (PV) and after 15 years in the case of commercial vehicles (VC). Details of the program will be shared separately by the ministry.

Kenichi Ayukawa, president of the Society of Indian Automobile Manufacturers (SIAM), called the budget “visionary.” “The government has adopted an expansionary stance by emphasizing the construction of infrastructure with measures to improve efficiency and increase competitiveness. Good macroeconomic growth will translate into good demand from the automotive sector. Specifically, the vehicle scrapping program has good intention and the auto industry would be keen to work with the government on suggestions to maximize the benefits for the environment and society, ”he said. .

Welcoming the policy of voluntary vehicle scrapping, the president of the Federation of Automobile Dealers Associations, Vinkesh Gulati, said: “If we take 1990 as the base year, there are around 37 lakh of commercial vehicles (CVs). ) and 52 lakh of passenger vehicles (PV) eligible for voluntary scrapping. As an estimate, 10% of the CV and 5% of the PV may still be traveling on the road. “

Vipin Sondhi, Managing Director and CEO of Ashok Leyland Limited, said implementing a voluntary scrapping policy is good for the environment and good for starting a circular economy. However, we are awaiting further details on the policy, as the industry had requested an incentive-based scrapping policy for it to be effective, he said.

Guenter Butschek, CEO and Managing Director of Tata Motors, said: “For the automotive sector, which contributes significantly to India’s GDP, there are several welcome announcements including a voluntary vehicle scrapping policy. to phase out old and unsuitable vehicles; increasing the public transport system in urban areas; continued focus on adopting cleaner fuels; increased spending for the development of road infrastructure and expansion of the Swachh Bharat mission. “

Warren Harris, CEO and CEO of Tata Technologies, said the Center has finally set the tone for the recovery of the auto industry, which has been significantly affected by the pandemic. This would not only help boost demand for commercial vehicle production, but also support the entire transportation ecosystem, he said.

Vinay Raghunath, Partner and Leader of the Automotive Sector, EY India said: “The scrapping policy is a highly anticipated development where, in addition to stimulating demand in the sector, it will simultaneously help reduce pollution and consumption. of fossil fuels while allowing the reuse of steel. /aluminum. Extending this policy to other aspects such as tire scrapping can help boost demand in related sectors while helping India become more atmanirbhar (self-sufficient).

Deven Choksey, MD, KR Choksey Shares and Securities, called him a great game changer for the auto and auto accessories industry. According to him, between 2001 and 2005, up to 7 million passenger vehicles and 11 million commercial vehicles were registered and at least double these figures constitute the potential number of vehicles which can be scrapped.

Arun Firodia, president of Kinetic Group, said it would be a better idea to levy a green tax on vehicles over 15 years old, instead of a voluntary scrapping policy.

Nagesh Basavanhalli, Group CEO and Managing Director, Greaves Cotton Limited, said: “While the auto industry would have liked to see more direct measures in the budget, the scrapping policy is a step in the right direction. both for ecology and economy. The focus on rural and agricultural credit growth will also have a cascading effect on the automotive sector. “

Martin Schwenk, Managing Director and CEO of Mercedes-Benz India, said: “The decision to spend more on infrastructure despite the high budget deficit will boost the overall economic recovery and we should see a positive impact on the photovoltaic market. However, the increase in the duty on automotive components is unexpected in such a period of recovery, and it will increase the cost of production, leading to higher costs for consumers. There could have been a new push towards electric mobility by lowering import duties on electric vehicles (electric vehicles).

Tarun Mehta, co-founder and CEO of Ather Energy, said, “The voluntary vehicle scrapping policy announced to phase out old and unsuitable vehicles will encourage the sale of new vehicles. It is good to see that the government is seeking to address concerns about the reverse duty structure of the GST (goods and services tax). We look forward to more details on the reverse tariff structure and Production Incentive Scheme (PLI) announced by the Minister of Finance. “

Sohinder Gill, CEO of the Society of Manufacturers of Electric Vehicles, thanked FM for announcing the scrapping policy and said it would help encourage adoption of greener vehicles.

“Finally, the long-awaited scrapping policy has been announced, which is a welcome step. This will increase new vehicle sales and in turn stimulate demand for tires, ”said Dr Raghupati Singhania, Vice President of JK Organization and CMD of JK Tire and Industries Limited.