Incentive-driven scrappage policy needed: Auto Sector

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SME Times News Bureau | 09 Apr, 2015
The Indian automobile industry on Wednesday said that an incentive-driven scrappage policy for old vehicles is needed to encourage owners to give up such vehicles.

Welcoming the National Green Tribunal's Tuesday (NGT) decision to ban all 10-year-old diesel vehicles from plying on Delhi roads, the Indian industry said that rather than a mandatory ban an incentive driven scrappage policy is needed to encourage owners to let go of their vehicles.

"We have been in dicussion with the government over a policy that gives incentive to owners to let go of their old vehicles. There is a need of a scrappage policy for old vehicles which is incentive driven," Vishnu Mathur, director general of Society of Indian Automobile Manufacturers (SIAM).

"The NGT order is in the right direction. However, the focus should have been on 15-year old vehicles. The ban should also have been seen on a nationwide scale as the old vehicles would be resold and will continue to pollute somewhere else, until a scrappage policy is in place," Mathur added.

Meanwhile, other industry analysts said that the ban might have an impact on the passenger diesel vehicle sales in the national capital.

"The consumer will think that the resale value of a diesel vehicle might be impacted. The consumer in that case might be attracted towards petrol or other fuel powered vehicle," Kumar Kandaswami, senior director, Deloitte in India said.

On the commercial vehicle space, Bharat Gianani, senior equity research analyst, auto and auto ancillary said that the ban might give a fillip to the sales.

"Commercial vehicle sales might get a boost in the region. As the segment is primarily driven by diesel powered vehicles and fleet owners also look at the mileage efficiency of their vehicles," Gianani said.

The current share of diesel cars in Delhi is about 45 percent, where one diesel car is equal to about seven petrol cars, said environmentalist Vivek Chhattopadhyay adding that this gap must be closed with tighter emission norms and equal taxation for both fuels.

The tribunal had, late last year, banned petrol vehicles over 15 years old in the national capital.