To encourage voluntary vehicle scrapping, the Federation of Automobile Dealers’ Association (Fada) has urged the Indian Finance Minister to announce incentive-based schemes, rather than mandating people to replace their old vehicles.
The auto body gave the example of voluntary surrender of LPG subsidies by consumers. Similar schemes have been successfully implemented in several countries including the US, Canada, the UK and Italy by providing fiscal incentives and concessions for replacement of vehicles through a single-window fleet modernization program.
The Indian auto body also suggested other measure including a design for robust inspection and certification policy or the end-of-life policy for vehicles. Both, scrappage policy and inspection policy, would take time and therefore, there was a need to successfully implement attractive incentives for scrapped vehicles.
Fada also suggested the introduction of benefits for claiming depreciation on vehicles for tax-paying individuals and extension of depreciation periods for corporates in a bid to boost vehicle demand. This will also increase the number of individuals filing IT returns which will result in higher GST collection, the body noted.
Vinkesh Gulati, president of Fada, said that the upcoming Union Budget for 2021 should focus on reviving the Indian economy from the pandemic and to boost consumption-led demand. He added that Indian automobile industry is a barometer of the economy and its revival will pull up the economy.