FADA welcomes vehicle scrappage policy announced in Budget 2021

The Federation of Automobile Dealers Associations (FADA) on Monday welcomed the announcement of a voluntary vehicle scrappage policy by Finance Minister Nirmala Sitharaman during her Budget 2021 speech in Parliament. Underlining that there are lakhs of vehicles eligible for voluntary scrappage, FADA, the apex national body of automobile retail indust appreciated the move to phase these out.

Vehicle scrappage policy pertains to old vehicles being taken off roads and sent to scrapyards. It has the potential of bringing down emission levels and boosting new vehicle sales, apart from providing raw materials extracted from the scrapped vehicles. "FADA is happy to note that the Hon’ble Finance Minister has finally announced the much awaited scrappage policy, though voluntary to phase out old vehicles," said Vinkesh Gulati, FADA President. "If we take 1990 as base year, there are approximately 37L CVs and 52L PVs eligible for voluntarily scrappage. As an estimate, 10% of CV and 5% of PV may still be plying on road."

Gulati, however, added that the fine prints will still have to be examined to ascertain if and to what extent this would have a positive impact on retail. He however went on to add that a reduction of customs duty on steel products to 7.5% will benefit auto OEMs which could in turn help customers and boost demand.

Depreciation benefits on vehicles for individuals, however, was something that FADA was also eying but found no mention in Budget 2021. "While we expected disposable income for individuals to increase with enhancement of IT slabs and depreciation benefit on vehicles for individuals, the same has not been taken into consideration," said Gulati.