In its bid to transform India into a global manufacturing hub, the union government has set an ambitious aim of doubling the automobile sector’s annual turnover to Rs 15 lakh crore by 2026, Nitin Gadkari, minister for Road Transport and Highways today said.
The minister, who was present in Noida to inaugurate a vehicle scrapping and recycling unit, emphasised on the overarching benefits that recycling of vehicular waste may bring about for the sector and the overall economy.
According to him, currently the annual turnover of the automobile sector in the country stands at Rs 7.5 lakh crore that includes Rs 3 lakh crore worth of exports. But expansion of vehicle scrappage and recycling has immense potential in bringing down input costs in the long run and make the local industry more competitive in the global markets.
“The scrappage policy, launched by the government, will make Indian automobile sector more competitive in the international market as all key raw metals will eventually get recycled. This will consequently bring down material costs. Cost of raw materials like steel, copper, aluminium, plastic and rubber, among others will come down. Recycling will also bring down our imports. This will also help in achieving our the government’s goal of Aatmanirbhar Bharat,” he said.
Incidentally, the auto manufacturers are currently facing record high material costs that is forcing them to hike prices repeatedly. According to RC Bhargava, chairman of the country’s largest auto maker Maruti Suzuki (MSIL), steep rise in commodity prices has resulted in an unprecedented cost escalation for the company. At 80.4 per cent of net sales, material costs stood at an all-time high for MSIL at the end of September quarter.
Gadkari today said, the vehicle scrappage policy has potential to bring down cost of manufacturing by up to 33 percent and boost auto sales by 12 per cent. The government now expects to get Rs 10,000 crore additional investment in the scrapping and recycling sector.
“Within next two years, I am confident that there will be 200-300 new scrapping and recycling facilities in India. Our aim is to develop 3-4 such centres in every district. This will not only create 200,000 jobs, but will also generate up to Rs 40,000 crore additional GST (goods and services tax) collection from vehicle sales,” he said.
The automobile sector in India is one of the crucial manufacturing sectors that contributes over 7 per cent towards the country’s gross domestic product. According to the minister, it offers “maximum employment opportunity and maximum revenue to central and state governments”.
Apart from boosting India’s tax collection, auto sales and bringing down gaps in the country exports versus imports, the scrappage policy will also help India achieve its emission goals by bringing down the extent of vehicular pollution. As per estimates, a 15-year-old vehicle causes 15 times more air pollution than a new one, he said, “This is a win-win policy for all stakeholders and will help in creating a circular economy.”
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