Federation of Automobile Dealers Associations (FADA) has urged the Union finance minister Nirmala Sitharaman to go for an immediate scheme, based on incentive, for encouraging voluntary scrapping of old vehicles and replacing them with newer ones.
In a pre-Budget memorandum to the finance minister, the auto retailers’ body said that government must design a robust inspection and certification policy or end of life policy for vehicles in the country. However, as both the policies would take time to be effectively implemented, there was a need for an attractive incentive for successful implementation of vehicle scrappage policy across the country.
FADA recommends that the policy implementation should be focused on incentives rather than strict mandates. It is more feasible to encourage people than to force them to replace their old vehicles with new ones. “We have already witnessed a similar success in the voluntary surrender of subsidies by consumers. All vehicles registered in India until March 31, 2000 should qualify under the modern fleet vehicle replacement scheme. Similar schemes have been successfully implemented in the US, Canada, the UK and Italy by providing fiscal incentives and concessions for replacement through a single-window fleet modernisation programme,” FADA said.
FADA has sought introduction of benefits for claiming depreciation on vehicles for individuals paying income tax as well as extension of depreciation period for corporates. This will boost vehicle demand during these extraordinary times and also increase the number of individuals filing IT returns and promote growth in GST collection for the government. The increase in depreciation rate for all types of vehicles which was valid till March 31, 2020 should also be extended for FY21 and it will fuel demand further.
Vinkesh Gulati, president, FADA, said: “The upcoming 2021 Union Budget should be focused on measures to revive the Indian economy from the pandemic slowdown and boost consumption led demand. The Indian automobile industry is a barometer of the Indian economy and its revival will in turn pull up the economy. The auto retail industry is one of the key pillars of India’s growth trajectory, contributing 4.5 million jobs. We look forward to a demand led growth oriented budget.”
Other key recommendations of FADA include reduction of corporate tax for proprietary and partnership firms and keeping the auto dealers out of the ambit of annual TCS of 1%.
