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Tata Motors, Ashok Leyland pitch for incentive-based scrappage policy

Tata Motors, a leading automobile manufacturer says that an incentive-based scrappage policy can help create demand in the commercial vehicle sector.


Tata Motors Ashok Leyland Scrappage Policy

According to a recent article in IndiaTimes, Tata Motors and Ashok Leyland have said a well-defined and financial incentive-based scrappage policy can help create demand in the commercial vehicle (CV) sector which has come to a grinding halt. 

A vehicle scrappage policy has been in the works for some time now. The plan aims to put a cap on the life of vehicles in terms of years run.

Tata Motors, a leader in the commercial vehicle sector, said upcoming legislation should clearly define incentives as well as regulatory norms for the disposal of old vehicles.

A Tata Motors spokesperson said:

“A well-defined and effective scrappage policy is one of the key imperatives for driving demand of cleaner BS-VI vehicles and more appropriately so, in the current shrinking demand across end-use sectors.”

Reiterating that replacement demand will remain the key driver for the sale of new vehicles, the spokesperson contended that the policy needs to have a clear definition of ELVs (end-of-life vehicles) and inclusion of financial incentives.

The Tata Motors spokesperson added:

“The government’s proposed renewal of fitness certificates for vehicles older than 15 years every six months, instead of the current time frame of one year, is a welcome one.”

The company, however, added that the upcoming legislation needs to define tangible incentives for customers, as well as regulatory norms for enforcing the disposal.

“In India, scrappage value chain is in early stages of development, and is only able to process a lower double-digit percentage of the total ELVs available on the road,” the spokesperson noted.

Two reasons for doing this is the clear definition of ELVs and also the absence of any financial incentives/subsidies for customers to dispose of their vehicles.

“Additionally, there is a need to address the criteria to define dismantlers and a mechanism to ensure adherence. India will need multiple environmental-friendly scrappage centres across the country to cater to the local needs of each region,” the spokesperson added.

The spokesperson mentioned that current setups have specific challenges such as being limited to few clusters, thereby catering to local needs and devoid of the capacity to scrap total ELVs on the road.

Echoing the views, Ashok Leyland MD and CEO Vipin Sondhi said demand for commercial vehicles needs to be triggered.

“Commercial vehicle sector, which was already struggling prior to the pandemic, has now come to a grinding halt. As is well known, commercial vehicles are a lifeline to any nation’s economy. It is imperative that demand for commercial vehicles be triggered.”

A scrappage scheme with incentives in the form of a rebate in GST, road tax or registration charges would help give demand a boost, Sondhi said.

Toyota Kirloskar Motor Senior Vice President (Sales and Marketing) Naveen Soni said incentivised scrappage policy will encourage decamping of old and polluting vehicles and is an urgent need of the hour. He said:

“Given the current crisis, the policy will lead to a win-win situation for all, consumers would benefit from the scrap value, tax savings and added discounts, while OEMs will gain from a much-needed push to demand created by the monetarised benefits passed on to the buyers.”

Also, early removal of vehicles running on prehistoric emission norms will have a more sustainable impact on the environment, Soni said.

“Especially in areas like NCR where studies have shown that 50 per cent of the vehicular pollution (pm 2.5) is caused by old and polluting vehicles,” he added.

Union Minister Nitin Gadkari had earlier this year said that scrappage policy was in the final stages of getting Cabinet approval.