After seeing the overwhelming response evoked by the 'cash for clunkers' scheme in a number of western countries recently, Indian auto manufacturers have requested the government to launch a similar programme in India.
The 'scrappage incentive scheme', popularly known as 'cash for clunkers', is a monetary scheme introduced to bring about a turnaround in the beleaguered Western auto industry, while simultaneously pulling older, more polluting and inefficient vehicles off the road.
Under the scheme, the government provided incentives of $1,000-5,600 directly to those buyers who were willing to trade their old, gas-guzzling vehicles for new, fuel-efficient vehicles.
Indian auto bigwigs, including Tata Motors and Mahindra & Mahindra, among others, through the association of the Society of Indian Automobile Manufacturers (Siam), had approached the government to implement a similar programme. However, they are yet to succeed.
Mahindra & Mahindra president (automotive sector) Pawan Goenka said: "It was something which we had dicussed with the government. We had made some proposals, which could ultimately help restore demand while, at the same time, take old vehicles off the road. There were, however, concerns over funding of the programme (by the government) which may have led to the delay."
Although demand for cars and other passenger vehicles has bounced back, as is evident from the auto companies' sales performances in the past two months, sales of medium and heavy commercial vehicles still appear in the red.
A senior executive from Siam said: "In Kolkata, CVs which are over 15 years old have been stopped from operating. We believe the Centre can also do something along similar lines for the entire country. We have written to the ministry of environment to look into the matter. The need of the hour is to incentivise the CV industry to spur demand, while also taking care of emissions standards."
Sales of MHCVs, including trucks and buses, dropped by 30 per cent to 54,996 units in the April-July period, compared with 78,689 units recorded in the same period last year. Concurrently, sales of passenger vehicles rose by 9.45 per cent to 564,494 units during the same period.
Force Motors chairman and managing director Abhay N Firodia said: "The industry had made a comprehensive presentation to the government earlier in the year, where measures like duty rationalisation were also talked about. However, we have not received any indication from the government about any steps taken in this regard."
The industry argued that a 'scrappage scheme' would bring about several positive steps in the market, including the fact that it will bring down the average age of an operational vehicle substantially, while improving overall reliability and safety. It will also result in improvement of fuel efficiency, thereby adding to profitability while adhering to the stringent emission control norms.
"Buying a new truck would not be a big issue for the people who operate an old truck if they can avail of some financial support.
However, there has not been much progress on this issue in India, even though this is something that is done in many countries. When the owner decides to scrap an old truck, which is 13-15 years old, he gets a tax credit overseas. But there is no such incentive in India," added Firodia.
According to latest estimates, more than a million trucks plying on Indian roads are at least 15 years old. These trucks are usually run by owners outside city limits due to their polluting nature.
