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Government looks to formulate scrappage policy for vehicles and white goods

Government looks to formulate scrappage policy for vehicles and white goods

Government looks to formulate scrappage policy for vehicles and white goods
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By Parikshit Luthra  Aug 28, 2019 3:21:57 PM IST (Published)

Different ministries of the central government are undergoing deliberations to formulate a consolidated standalone scrappage policy.

Different ministries of the central government are undergoing deliberations to formulate a consolidated standalone scrappage policy, people familiar with the matter told CNBC-TV18.

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The Society for Indian Automobile Manufacturers (SIAM) had recently urged the government to formulate a scrappage policy to phase out older and polluting vehicles and create demand at a time when the auto sector is going through its worst slowdown since 2009.
The government may soon announce measures to encourage scrapping even before a policy is announced. The Ministry of Road Transport and Highways had recently brought out a draft notification to hike registration fees for new vehicles and for vehicles older than 15 years.
While the hike for new vehicles has been deferred until next year, the government may soon give a nod to the proposal to increase compliance burden for vehicles older than 15 years. The move would encourage customers to go for scrapping and purchase of vehicles, the people familiar with the matter said.
Inter ministerial discussions underway indicate that the government is considering capacity building measures in both the formal and informal scrapping sectors. People privy to the discussions said that there is also a need to harness the strengths of the informal scrapping sector which already exists.
The Centre may even look at the private sector to setup 13,000-15,000 automotive fitness centres to certify vehicle fitness. This would be in line with global practices.
The government is yet to decide whether to bring out a stand alone scrappage policy or announce it as part of a larger mobility policy, the people said. Any such policy is likely to cover both automobiles and white goods. The government would have to bring out a draft notification for public comments before announcing any such policy.
The Centre is considering a slew of proposals from the auto industry, including a goods and services tax (GST) cut from 28 to 18 percent, introduction of a scrappage policy and easing of bank finance.
The government is already taking steps towards easing bank finance and scrappage policy but the prospect of a GST reduction seems distant at this stage.
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