During the Union Budget 2021-22, Finance Minister Nirmala Sitharaman today announced a Voluntary Vehicle Scrappage Policy under which there will be a fitness test after 20 years for personal vehicles and after 15 years for commercial vehicles. The Ministry of Road Transport and Highways (MoRTH) will be providing the details for the vehicle scrapping policy soon. The new vehicle scrappage policy will be implemented in India starting April 2022. For those not in the know, the vehicle scrappage policy aims to replace older vehicles with new ones and the Government is promoting it by offering benefits to the consumers who get rid of their older vehicles for a new one. The aim is to reduce air pollution and also minimise the number of accidents on roads. As car rental and used car space will also be affected directly or indirectly by the said policy, here’s how some key players in this segment reacted to the announcement:
Sunil Gupta, MD & CEO, Avis India said, “We welcome the Union Budget tabled by the Finance Minister today, especially the announcement of voluntary scrapping policy. This comes in as a big support to automakers, who will benefit from this policy. Moreover, personal vehicles older than 20 years and commercial vehicles older than 15 years to undergo a fitness test is indeed focused on phasing out older vehicles. It will in turn promote the use of more eco-friendly vehicles. The specifics of the policy will be announced by MoRTH in the days to come.
The annual budget brings in good news for commercial vehicles as well with 18,000 crore to be allotted for procuring and maintaining 20,000 buses as well as the construction of road infra to support the sale of commercial vehicles. It is therefore the highest ever allocation of 1.08 lakh crore to MoRTH for capital. We further welcome the FM’s move on increasing custom duties on some auto parts by 15%.”
Sumit Garg, Co-Founder and Managing Director at Luxury Ride said, “I welcome the move announced by Finance Minister Nirmala Sitharaman on voluntary scrappage policy, which will reduce vehicle pollution and promote a healthier environment. As passenger vehicles are major pollution contributor, it has to undergo a fitness test after every 15 years and personal vehicles for 20 years. Government to incentivize incorporation of one person companies is a boost for the startup ecosystem. I also welcome the move on exemption of income tax filing returns for the senior citizens of our country.”
Sandeep Aggarwal, Founder & CEO, Droom said, “Government extending the life of passenger vehicle and commercial vehicle by 5 years each is a good catalyst for the automobile industry. The vehicle is among the top 3 big-ticket items for any human being and larger economic life for it only means better ROI for the users. This also means the used automobile industry in India will be more robust in decades to come. Government allocation of Rs. 18,000 crores for infrastructure will certainly boost the automobile industry. Also, India adopting global standards for scrapping vehicles will only create a more holistic ecosystem for the industry.
No country has ever achieved economic freedom until it has fully democratized transportation and its reach. From the USA to Western Europe and China to Japan all have unleashed their economic growth due to the adaptability towards automobiles and world-class road infrastructure.”
Ruchit Agarwal, Co-founder and CFO, CARS24 said, “The 2021 Union Budget is a big booster for spearheading the economy’s growth. We are glad the Government has announced investment in road infrastructure coupled with announcement of scrappage policy. These will bode well for the auto industry as they will help it achieve the twin objectives of boosting demand whilst recycling old and polluting vehicles in our country. While we look forward to the minute details of the policy, ensuring seamless execution will be key.
Additionally, with the government allowing one man companies and increasing the threshold for the definition of small companies, we expect and hope that used car dealers in India will consider shifting from sole proprietorship to companies. This will make them further organized and open up different forms of financing markets for them. Extension of one year tax holiday will also prove to be a welcome move for start-ups in India. We are sure that the announcements made under 2021 Union Budget will help sustain the pace of growth witnessed in the last few months in the auto industry.”
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