Union Budget 2021: Auto industry upbeat about vehicle scrappage policy, vows to work with govt for maximizing environmental benefits

New Delhi: Finance Minister Nirmala Sitharaman presenting the Union Budget 2021 on February 1 announced the much-awaited voluntary vehicle scrapping policy to phase out old and polluting vehicles. 

Under voluntary vehicle scrapping policy, personal vehicles would undergo fitness test after 20 years while commercial vehicles would require it after completion of 15 years.

Kenichi Ayukawa, President, Society of Indian Automobile Manufacturers (SIAM ) said that the vehicle scrappage scheme has a good intent and the auto industry would be keen to work with the Government on suggestions for maximizing benefits to environment and society.

"In a visionary budget, the government has adopted an expansionary stance with a thrust on infrastructure building with measures for efficiency improvement and increasing competitiveness. Good macroeconomic growth will translate to good auto sector demand," he added.

Martin Schwenk, Managing Director and CEO, Mercedes-Benz India said, "It’s good to see some positive movement through the scrappage policy and we also expect the capital expenditures to indirectly help the industry."

In the Budget 2021-22, Finance Minister Nirmala Sitharaman proposed increase in customs duty of various parts, including ignition wiring sets, safety glass and parts of signalling equipment to 15 per cent with effect from February 2, with auto leaders believing that the move will lead to increase in car prices.

"The increase in the rise in auto component duties is unexpected in such revival period, and it will increase the production cost, leading to higher cost for consumers. There could have been further push towards e-mobility by lowering import duties on EV,” Schwenk said.

"We welcome the government’s announcement pertaining to the scrappage policy, made voluntary, for vehicle age of 15 years for Commercial Vehicles and 20 years for personal vehicle. This move will significantly reduce pollution and should help bolster demand for new vehicles in the CV & PV sectors," Venkatram Mamillapalle, Country CEO & Managing Director, Renault India Operations. 

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The 2021 Union Budget is a big booster for spearheading the economy’s growth said Ruchit Agarwal, Co-founder and CFO, CARS24. "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," he added. 

Jatin Ahuja, Founder & CEO, Big Boy Toyz welcomed the Voluntary scrappage policy stating that it "seems like a utilitarian step in the Automotive sector, where the customers will be able to get their vehicles tested & use it for an additional 5 years. "