India gets the ball rolling for a voluntary vehicle scrappage policy which will come to effect from April 1. The policy will focus on phasing out personal vehicles that are older than 20 year and commercial vehicles older than 15 year and details for the same are awaited.
The domestic auto sector and Indian recyclers have been persuading the Indian government for a comprehensive auto scrappage policy to boost new vehicle sales as well as generate domestic scrap, thereby reducing input costs for both steel producers and automakers.
Indian auto components manufacturers are also slated to benefit from increased duty on certain non-critical auto parts to 15pc to curb imports. The minister has proposed to hike customs duty on auto parts including ignition wiring sets, parts of signaling equipment, electrical lighting, instrument panel clocks, demisters, defrosters to 15pc from 7.5-10pc. This will boost domestic production and increase consumption of secondary aluminum, copper, zinc and scrap.
The budget has also reduced duty on semi-finished, flat and long products of non-alloy, alloy and stainless steel to 7.5pc.
During her budget speech for FY2022 on Monday, India’s Finance Minister Nirmala Sitharaman announced a voluntary vehicle scrapping policy. The government which will set up automated fitness centres to phase out polluting and inefficient vehicles. “This (the policy) will help in encouraging fuel-efficient, environment-friendly vehicles, thereby, reducing vehicular pollution and oil import bills,” said the minister. Earlier, India’s Ministry of Road Transport and Highways the policy had hinted on a vehicle scrapped policy roll out in April and details are awaited from the ministry.
Auto sector contributes to 7pc of India’s total GDP and 25pc of the country’s total industrial output. The western state of Maharashtra is an auto manufacturing hub with 25pc of India auto industry located in the state. Maharashtra’s industry body Mahratta Chamber of Commerce Industries and Agriculture (MCCIA) has welcomed the government decision and urged the government to speed up the implementation of the scrappage policy. Prashant Girbane, Director MCCIA said the scrappage policy will give boost demand for new vehicles and translate into increased production of new vehicles. He also welcomed the decision of slashing down import duty on stainless steel products, which he said will help manufacturers cut input costs.