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The Indian Government could soon offer tax incentives for scrapping vehicles older than 15 years in the Indian market. The Transport Ministry has come up with a new proposal which will soon offer owners of vehicles older than 15 years with tax benefits.
The new proposed Scrappage Policy in India will be unveiled soon, with the transport ministry already having made a presentation to the PMO. This new proposal is part of the slew of initiatives taken by the government to boost demand in the auto sector.
The ministry feels that offering tax incentives to owners of vehicles older than 15 years, will encourage them to scrap their vehicles in exchange for new ones. Thus improving the demand and sales in the Indian market.
The new Scrappage Policy from the Indian government will also come with other proposals as well. This includes the need for a mandatory vehicle fitness certificate to be made every six months, for old vehicles.
Officials in the know, told ET Auto, "We will make the scrapping certificate tradeable so that a consumer can avail a discount in lieu of that certificate while purchasing a new vehicle. Tax incentives are also highly likely to come as part of the scraping policy."
The Indian auto industry is currently facing its worst slowdown yet in 20 years. Most automotive manufacturers have been registering declining sales consistently over the past nine months.
In order to bring back the demand in the market, the Indian government recently announced a number of measures to help get the auto sector back on track. This included putting off the increase in registration prices on new vehicles for an indefinite period. However, the registration renewal fee will be implemented as planned. This will see a hike in price by almost Rs 15,000 for passenger vehicles.
The Indian government had earlier proposed a hike in the registration fee for IC vehicles in the Indian market. The registration fee hike was said to increase by up to 25 per cent than its current rates. This was mainly proposed to encourage the move towards electric mobility in India.
However, with the industry slowdown, the government was forced to put a hold on the registration fee hike. This proposal has currently been moved for review sometime after July 2020.
Apart from the hold off on the registration fee hike, the Indian government also confirmed that BS4 vehicles bought on or before March 2020 will be legal until their registration period. This was in response to many speculations which said that all BS-IV vehicles would become illegal after April 2020.
The Finance Ministry, led by Nirmala Sitharaman also announced an additional 15 per cent depreciation on all vehicles brought between now and March 2020.
Thoughts On The New Scrappage Policy In India
The Indian auto industry is currently facing its worst decline in the country. The Indian government is taking drastic steps to improve the demand in the industry and bring it back on track; the new scrappage Policy being one of them. Industry experts though feel that the market will improve with the upcoming festive season in the country.