Indian consumers are upset with govt's vehicle scrappage policy, survey suggests

Indian consumers are upset with govt's vehicle scrappage policy, survey suggests

Consumers want kilometers driven instead of age to define old vehicles as well as an increase in vehicle scrappage incentives, a survey by LocalCircles has found.

Indian consumers are upset with govt's vehicle scrappage policy, survey suggests Indian consumers are upset with govt's vehicle scrappage policy, survey suggests

Initially launched by Prime Minister Narendra Modi in August 2021 as a measure to curb pollution caused by old and unfit vehicles on the road, the Vehicle Scrappage Policy is causing a lot of concern among Indian automobile owners according to a recent survey. 

The policy, which is inarguably an important initiative toward curbing pollution, especially in the world’s 3rd largest pollution emitter, is being met with great resistance by Indian consumers who are questioning the policy's very definition of old vehicles. 

The new scrappage policy lays forth the requirements for passing the fitness test for cars that are more than 15 years old, as well as the safety and equipment checks. As part of the same, it mandates fitness testing for commercial vehicles older than eight years, in the gap of every two years. In the case of personal automobiles, owners must have a fitness test performed after 15 years, if the vehicle is beyond 15-years-old. 

Although it offers some incentives to car owners to trash their old and unfit vehicles, such as reduced registration costs and road taxes, consumers are required to pay a monthly penalty of Rs.300-500 if they fail to renew their vehicle registration in time.

According to a recent nationwide survey conducted by LocalCircles of over 34,000 automobile owners from 291 districts across India, as many as 7 times of the vehicle owners want vehicle scrappage criteria to be based on kilometers driven rather than the vehicle's age. Many customers complained that age was not a realistic criterion for vehicle scrappage since, for instance, a customer may have driven a vehicle for fewer than 50,000 kilometers despite it being older than 15 years.

As an alternative to this, over 18 per cent of the respondents suggested, ‘15 years and 15,000 km for private vehicles, and 20 years and 200,000 km for commercial vehicles’ to be the criterion to look for. 

Furthermore, while the policy outlines incentives worth 4-6 per cent of the ex-showroom price as scrap value for older vehicles when consumers opt to buy a new one, in addition to a waiver of registration fees and similar tax rebates, Indian consumers believe that the incentives to scrap their old vehicle and buy a new one should be made more appealing. According to the findings of the survey, over 65 per cent of the vehicle owners want a tax deduction equivalent to 10 per cent of the old vehicle’s original invoice value or 50 pr cent of road tax paid for any new vehicle purchased. 

Lastly, the government mandates car owners to undertake a fitness test on their old vehicles every 5 years after 15-20 years, according to the regulation. This fitness test alone is estimated to cost the Indian customer roughly Rs.40,000 every five years, in addition to paying surcharges of around 10 to 25 per cent of green taxes. Given these costs and the failing incentives to scrap their old vehicles, it is expected that over 51 per cent of car-owning households will reduce their vehicle ownership in the future after the Vehicle Scrappage Policy takes effect, hence causing a lot of concern among Indian car-owners.

People are clearly of the opinion that the government should make scrapping old automobiles a more appealing prospect in order to ensure the constant ownership of vehicles by Indian consumers. With the existing policy parameters, however, maintaining an old vehicle with all of the required certificates is plainly too expensive, and the incentives supplied to purchase a new vehicle are clearly insufficient to please the typical Indian consumer.



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