The Indian car market has seen exponential growth in the last few years. Due to the pandemic, people are preferring private modes of transport like cars. With that being said, the government is bringing in some laws to regulate the auto industry. Some of these laws are to safeguard the environment. While some are to help improve the safety standards in India.
The Indian auto sector transitioned into BS6 norms in April 2020. Considering the technicalities involved, the government divided BS6 into two stages: stage one in April 2020 and stage two, which will be implemented in 2023. With the implementation of the second stage of BS6, vehicles will need to meet the actual driving emission norms and not be limited to testing in laboratories.
All vehicles will have an OBD2(on-board diagnostics) standard monitoring various cars functions and emissions. Development of the technology plus the additional hardware and software will add to the manufacturing cost. In simple terms, BS6 stage 2 will increase the ex-showroom price of all cars. On the positive side, this change will help reduce emissions, lowering pollution.
The Ministry of Road, Transport and Highway (MoRTH) recently approved a draft notification mandating six airbags for cars under-filling M1 category. The category essentially includes cars that seat up to eight passengers. It states that M1 category cars should be fitted with curtain airbags to protect the occupants. The order will come into effect for all cars manufactured from October 2022. These safety features will increase the cost of such vehicles by 20k to 30k.
The Vehicle Scrappage Policy is a government-funded programme to replace old vehicles with modern & new vehicles on Indian roads. According to the policy, commercial vehicles aged above 15 years and passenger vehicles aged above 20 years will have to scrap if they do not pass the fitness test. The objective is to phase out old cars, reduce urban pollution and increase automotive sales.
Some incentives for scrapping old vehicles and buying new ones are also being offered. Manufacturers can give up to 5% on your new vehicle. Other benefits include zero registration fee for vehicle purchase, scrap value of 4-6% ex-showroom price of new vehicles and 25% & 15% rebate on road tax for personal and commercial vehicles, respectively.
The Government of India had introduced the FAME-II subsidy in 2019 to promote faster adoption and manufacturing of electric vehicles in India. Only advanced battery and registered vehicles will be incentivized under this scheme. In simple terms, the Government gives a discount to manufacturers of electric vehicles. Then these manufacturers pass on these benefits to the end customer.
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