The auto industry has agreed to a proposal by the Centre to offer a 1% discount on buying new vehicles if, correspondingly, an old one is junked.
The proposal was mooted by the government as it wants to incentivise scrapping of old vehicles.
The suggestion was proposed by Union Minister of Road Transport and Highways Nitin Gadkari in a meeting with the automobile industry, represented by the Society of Indian Automobile Manufacturers (SIAM), earlier this week.
While a 3% discount on new vehicles was suggested during the meeting, automakers agreed to offer a 1% rebate on them. However, they don't want the policy to take effect immediately during the ongoing festive season and at a time when margins are under the cosh, a source told the Business Standard.
Although India shifted to BSVI emission norms for vehicles and fuel on April 1 this year, the policy on old automobiles that have reached the end of their life is delayed.
A draft policy in this regard has been finalised and is awaiting approval from the Prime Minister's Office (PMO).
"Industry players want the policy to be deferred since they aren't sure if they would be able to absorb the discount in the event of any post-festival fall in demand," an official told the publication.
Apart from the discount, the Centre is also planning to exempt new vehicles from registration fees and road tax if the owner scraps an old one.