The policy statement for the first time recognises that there is a need to ensure that vehicles are fit for continued use, says Bhargava
R C Bhargava, Maruti Suzuki Chairman
The government on Thursday unveiled a draft vehicle sscrapping policy, which intends to push out old, polluting vehicles through disincentives like higher re-registration charges, while providing incentives like waivers on road tax, rebate on goods and services tax (GST) and 5 per cent discount from manufacturers. R C Bhargava, chairman Maruti Suzuki, tells Arindam Majumder that there should be stringent guidelines for setting up fitness testing centres to ensure implementation of the policy. He also questioned the logic of incentivising a customer to take an unfit vehicle off the road. Edited excerpts:
Will the scrapping policy help the automobile sector?
Why are we seeing if it will help the sector? Isn’t it necessary that a vehicle used for 20 years be in the same condition when it was bought?
India has not really enforced safe emission and fitness standards. The policy statement for the first time recognises that there is a need to ensure that vehicles are fit for continued use. It is very liberal, the fitness will be checked after 15 years and 20 years. In countries across the world, cars have to regularly get a fitness certificate but not India.
What do you think is most important for successful implementation of the policy?
We never really bothered to get into the system. On paper, we were checking emissions, but in practice what was happening didn’t bother anybody. So, now that the government plans to set up scrappage and fitness centre, hopefully the model will ensure the integrity of checking the certificates. The reason why we didn’t have a process of giving those certificates is because we didn’t have infrastructure for that.
The government has announced a slew of incentives for customers scrapping their old vehicles, including a 5 per cent discount from manufacturers. Is that viable?
Now that is where I have a slight disagreement over the policy. As part of the policy, the government will also have to come out with a standard for fitness.
If a vehicle is unfit by that standard, and it has to be scrapped because it is unfit, where is the need for giving him any incentive to buy a new vehicle? He has an unfit vehicle and that should not be allowed to be used. It is hazardous for everybody. He is not doing anyone a favour if it becomes an unfit vehicle. If he finds the cost of repairing it to restore it to the required levels of fitness is too high, he has to scrap it. So, where is the need for an incentive for that?
But the industry had earlier said the scheme will not function without an incentive?
The cash and clunker programme in the US has nothing to do with vehicle fitness. That was purely to stimulate the market. The vehicles that were being scrapped were not unfit, but it was done to incentivise people to buy a new vehicle.
All these countries also have periodical fitness tests and customers find it more viable to scrap it because it is no more economical to get a fitness certificate. I think, we have mixed up both the schemes. The first scheme was to stimulate demand. The next was to send unfit vehicles off the road.