India’s ‘cash-for-clunkers’ plan needs to offer a real incentive if it is to work

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Old cars and commercial vehicles will have to undergo a fitness test as the country tackles its air pollution problem

A residential area shrouded in dirty smog in New Delhi, India. Picture: REUTERS/DANISH SIDDIQUI

Carmakers are also counting on the plan to boost sales, which have been smashed by a widespread fall in demand amid the pandemic-induced recession, and after lockdowns shuttered showrooms and factories in 2020. Mahindra & Mahindra, India’s largest SUV maker, reported its first quarterly loss in nearly two decades in 2020, and Maruti Suzuki India posted its first-ever loss in the three months ended June 30.

Truckmaker Ashok Leyland is waiting for more details on the programme after the automotive industry requested an incentive-based policy for it to be effective, the company said in a statement after the budget. The government can encourage people to scrap their old vehicles by issuing rebates on the goods and services tax, road taxes and registration fees, Fada president Vinkesh Gulati said. However, the government’s ability to offer any significant incentive will be constrained by a drop in revenue during the pandemic.

 

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