Financial Incentives For Scrapping Of Old Vehicles In India To Increase Sales Of New Vehicles

India is one of the largest automotive markets in the world. The sales of automobiles in the country is higher than in most developed countries. However, there is one thing that sets it apart from the developed automotive markets - the absence of a proper vehicle scrappage system.

A majority of the vehicles in India never get scrapped. They only head to the scrapyard when in an absolute mess and are not driveable. As a result, a vast majority of old cars are still on the road and most of them are causing pollution as well. It was in 201 that the government of India finally put in place some scrapping norms.

The unregulated scrapping sector is finally on its way to being regulated and the government is working on setting up Automotive Vehicles Scrapping Facility (AVSF) units across the country. This is a brilliant move indeed. However, there must be some incentives to encourage people to head to these centres and scrap their old vehicles.

That is exactly what this standing committee has suggested to the government. At the end of the day, it all comes down to the Rupee. This whole scrapping process being put in place is not just to get old polluting off our roads, but also to increase the sales of new vehicles. This is where financial incentives will play a vital role.

The Parliamentary Standing Committee on Industries has suggested that the government should make provisions for 'Upfront financial incentives' in the National Vehicle Scrappage Policy. Such incentives being included in the policy will make it mandatory for scrapyards and new vehicle dealerships to provide a certain amount or percentage of financial incentives.

These financial incentives will be linked to the purchase of a new car and hence, it will boost the demand for new cars in India. Along with providing financial incentives, the standing committee also suggested that there should be more transparency on the selection of the Automotive Vehicles Scrapping Facility (AVSF) units.

These centres must adhere to the parameters already set by the government for such centres. Along with setting up the scrappage centres, the government has made it more difficult for people to own older vehicles.

Prices of re-registration, fitness tests, fitness certification, etc, have all been hiked significantly. This way, only enthusiasts who maintain their older vehicles properly and are willing to pay extra tokeep them, can do so. Those who are using older vehicles just for the sake of it will have to let them go at some point.

Thoughts On Financial Incentives Being Provided On Scrappage Of Old Vehicles

Incentives are needed for the faster adoption of any new policy or new technology. For example, electric vehicles' sales increased only when the government provided incentives and subsidies. Scrappage of vehicles and purchase of new vehicles will increase only when these financial incentives come into play.