FM Nirmala Sitharaman, on August 23, 2019, in a press conference on the state of economy, made a slew of announcements to alleviate the bleeding auto sector.
To tackle with the high unsold inventories, she announced an increase in deprecation cost for all automobiles by 15 percent acquired during the period from now till 31st March 2020. Additionally, the increase in one-time registration fee which the government has earlier proposed, will be deferred till June 2020.
The government has also lifted the ban on the purchase of new vehicles for replacing old vehicles by government bodies. Instead, a new ‘scrappage policy’ will be announced soon, something the automobile industry has long been lobbying for.
The policy is a government funded programme to promote the replacement of old vehicles with new ones. This will remove the outdated commercial vehicles off the road.
The Indian government has long been ruminating over a scrapping policy with an aim to reduce pollution caused by old vehicles that has been deteriorating the air quality.
Mahindra, Indian auto-giant, recently announced the launch of new scrappage centres called Mahindra Accelo, in partnership with Metal Scrap Trade Corporation Ltd (MSTC). This would be the first government authorised scrappage centre in the country.
The automobile industry of India has been slumping in the past couple of months and the sector has seen the worst sales in over two decades.
The sales of passenger vehicles has sharply declined by around 30 percent in July according to the data released by the Society of Indian Automobile Manufacturers. This has compelled many companies to shut down factories, leaving thousands of people jobless. The new government policies will hopefully uplift the sector which contributes significantly to the country’s economy.