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Vehicle scrappage policy by September end: Gadkari

Scrappage policy has been a long-standing demand from the industry especially for the down and out commercial vehicle segment

twitter-logoSumant Banerji | September 5, 2020 | Updated 22:24 IST
Vehicle scrappage policy by September end: Gadkari
Nitin Gadkari was addressing the domestic automobile industry at the virtual annual general meeting of Automotive Component Manufacturers Association (ACMA)

Union minister for road transport, medium small and micro enterprises Nitin Gadkari on Saturday said the vehicle scrappage policy will become a reality by the end of this month after it is passed in the upcoming monsoon session of the parliament that begins September 14. Gadkari was addressing the domestic automobile industry at the virtual annual general meeting of Automotive Component Manufacturers Association (ACMA).

"I know the industry is going through a tough time but I want to assure you that the government will do everything possible to help you. I have been talking about the vehicle scrappage policy for one and a half years now but I want to tell you that the policy has not been finalised and is in its last stage now. Very soon, maybe as early as the end of this month, it will become a reality," he said.  

Scrappage policy has been a long-standing demand from the industry especially for the down and out commercial vehicle segment. The industry says it will create demand for new trucks while removing older polluting vehicles from the road. Such schemes have been in place in developed economies for decades now. In India, it has been talked about since 2008.

Also read: Scrappage policy to be announced soon, says Prakash Javadekar

"It is in the interest of the government that the industry recovers soon. It earns much more revenues from taxes than what companies earn through profits," says Vinod Aggarwal, MD and CEO, Volvo Eicher. "It is high time the scrappage policy is introduced. It has been in the making for a long time. We are told it is now in final stages and will hopefully come before it is too late."

The domestic automobile industry has been in a protracted slowdown for over two years now. Vehicle sales declined by 18 percent in 2019-20, the worst in over two decades, and is slated to decline by another 26-45 percent in this fiscal. It would peg the industry back by over a decade. Sale of heavy trucks and buses, which is considered a barometer of the overall economy is the worst impacted.

Also read: Long-term policies, stable regulatory roadmap required for auto industry: Toyota

A study by HDFC Bank has estimated the market for vehicle scrappage and recycling at $6 billion. If defined well around 9 million vehicles could go off roads by fiscal 2021 and 28 million by 2025, largely comprising two-wheelers, it said. It would reduce carbon dioxide emission by 17 percent and cut particulate matter in air by 24 percent. Further, if half the Bharat Stage-II and III vehicles go off the roads, it would save 8 million tonnes of oil a year.

"A comprehensive scrappage policy will result in reduction in costs, save foreign exchange and increase revenues in the long term," said Ashok Khanna, group head for auto finance at HDFC Bank.

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