Parliamentary Committee: In the Scrappage Policy, the government should include provisions for 'financial incentives'

In its 313th report, the Department-Related Parliamentary Standing Committee on Industries recommended that the government provide arrangements for the purchase of new vehicles to promote demand "In the Scrappage Policy, there are "upfront financial incentives."

Under the chairmanship of Telangana Rashtra Samithi leader and members of the Upper House Dr. K Keshav Rao, a committee of 10 Rajya Sabha members and 21 Lok Sabha members, as well as six members of the Parliament Secretariat, made the recommendations and observations in its recent report on the state of "The Automobile Industry is in a Downturn."

The Committee gave its 313th report on action taken by the Ministry of Heavy Industries on the recommendations and observations contained in the committee's 303rd report presented before the Rajya Sabha and the Lok Sabha on February 3 last year, taking note of the revival on Heavy Industries.

On November 22, last year, the Ministry of Heavy Industries submitted its response to the committee's 303rd report. The committee discussed the draught report and approved it during its meeting on February 3rd of this year. "The committee is of the view that in addition to the setting of Automotive Vehicles Scrapping Facility (AVSF) centres across the country, the government should make provisions for upfront financial incentives in the Scrappage Policy to boost demand for purchase of new vehicles," the committee recommended.

The suggested financial incentives would encourage end-users to get rid of their old, polluting vehicles and buy new BS-VI compliant vehicles, according to the committee's study. In addition, the committee proposed that "adequate transparency should be maintained while selecting the proposed AVSF centre, which should be based on adherence to pre-decided parameters that have to be met by such centres." 

According to the report in action taken replies header, the Ministry of Road Transport and Highways issued a notification on March 15 last year under the provisions of the Motor Vehicles (Registration and Functions of Vehicles Scrapping Facility) Rules, 2021 for the establishment of Registered Vehicles Scrapping Facility (RVSF) to ensure transparency in the selection of RVSF.

According to the report, a draught notification issued on March 12 last year states that certificates of registration for government-owned vehicles will be non-renewable after 15 years, while a draught notification issued on March 15 last year states that registration fees, fitness testing fees, and a fitness certification fee for vehicles will be revised, and the initiative is aimed at creating an ecosystem for phasing out older polluting vehicles. Furthermore, according to the article, a draught notification dated March 26 last year provides for a reduction in motor vehicle tax for automobiles registered with a "Certificate of vehicle dismantling."

The draught notification dated April 8 last year also provides for "identification, regulation, and control of Automated Testing Stations," according to the report. The goal of all of these activities, according to the report, is to "promote openness in the vehicle scrapping process." Later, the committee proposed that the Automotive Mission Plan (2026)'s main goal be to advance the Indian automobile industry to become the engine of the "Make in India" initiative, as it is one of the most important drivers of the manufacturing sector.

The Federation of Automobile Dealers Association (FADA) informed the committee that allowing Foreign Direct Investment (FDI) in the auto sector will allow Indian auto dealers to expand by attracting foreign investment and collaborating with dealership groups internationally, without jeopardising national security.