Budget 2021-22: Like ‘Give It Up’, FADA suggests govt to launch voluntary scrappage policy

Stressing on the need for a ‘carrot’ rather than a ‘stick’, the Federation of Automobile Dealers Association (FADA) suggested the Finance Minister Nirmala Sitharaman to come up with a scheme in the Budget 2021-22 to be presented on 1 February.

Business Desk, ETV Bharat: Taking a cue from the success of the ‘Give It Up’ campaign launched by Prime Minister Narendra Modi to motivate wealthy LPG users to voluntarily surrender their subsidy, automobile dealers urged the government to launch a voluntary scrappage policy.

Stressing on the need for a ‘carrot’ rather than a ‘stick’, the Federation of Automobile Dealers Association (FADA) suggested the Finance Minister Nirmala Sitharaman to come up with a scheme in the Budget 2021-22 to be presented on 1 February.

“It is more feasible to encourage people than to force them to replace their old vehicles with new ones. We have already witnessed a similar success in the voluntary surrender of Gas Subsidies by consumers,” said Vinkesh Gulati, President of FADA.

For better results, the dealers body urged the finance minister to extend this policy for all those vehicles that were registered till 31 March 2000.

“All vehicles registered in India until 31st March 2000 should qualify under the Modern Fleet Vehicle Replacement Scheme,” said FADA in a statement shared with ETV Bharat.

The statement further noted that if fiscal incentives are attached to this voluntary scrappage scheme, it will give immediate results as witnessed in major developed countries.

“Similar schemes have been successfully implemented in the US, Canada, the UK and Italy by providing fiscal incentives and concessions for replacement through a single-window fleet modernization program,” added the statement.

The Give It Up campaign is considered as a successful initiative as more than 1 crore LPG consumers have voluntarily surrendered their LPG subsidy so far since its launch in March 2015.

Budget should focus on boosting demand

As the supply-side issues are mostly resolved with unlock guidelines in place, automobile dealers suggested the government focus on reviving demand for automobiles.

“The upcoming 2021 Union Budget should be focused on measures to revive the Indian economy from the pandemic slowdown and boost consumption led demand,” said FADA.

Thanks to an extended festive demand and the scare of high prices starting from January 2021, vehicle registrations saw its first positive growth in FY 2020-21 in last December.

As per the data collected from 1,270 out of the 1,477 regional transport offices (RTOs), vehicle registrations have gone up by 11.01 per cent last month.

For the industry battered by the Covid-19-induced disruptions, the recent inclusion under the production linked incentive (PLI) scheme boosted the prospects.

Last November, the Union Cabinet approved the PLI Scheme for the automobile sector at an outlay of Rs 57,042 crore. The industry expects that the Finance Minister will spell out the finer details of the scheme in the upcoming budget.

“The PLI scheme will make the Indian automotive Industry more competitive and will enhance globalization of the Indian automotive sector. This will also improve export and will make the production better in economies of scale,” said Vinkesh Gulati.