Budget 2021 | Fitness testing, certification of old vehicles should take place at earlier intervals: SIAM

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With the government proposing a voluntary scrappage policy in the Budget under which vehicles would undergo fitness tests after 15-20 years, auto industry body SIAM on Monday said fitness testing and certification of old vehicles should be done much earlier and at frequent intervals.

The industry body also raised concerns over the increase in customs duty on certain imported vehicle components, saying it could lead to increase in production cost of automobiles.

"While SIAM awaits the details of the vehicle scrappage scheme, it hopes and requests that fitness testing and certification should be much earlier and at frequent intervals to ensure safety, environment friendliness and fuel saving," Society of Indian Automobile Manufacturers (SIAM) President Kenichi Ayukawa said in a statement.

While presenting the Budget for 2021-22 in Parliament, Finance Minister Nirmala Sitharaman said under the voluntary vehicle scrapping policy, personal vehicles would undergo fitness tests after 20 years while commercial vehicles would require it after completion of 15 years.

The finer details of the policy will be unveiled within 15 days.

Commenting on the customs duty hike, Ayukawa said, "The increase in customs duty on auto parts/lithium ion cell parts is of concern and is likely to increase cost of manufacturing automobiles, wherever indigenisation is yet to happen."

The government on Monday proposed an increase in customs duty on certain imported components used in automobiles.

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In the Budget 2021-22, Sitharaman proposed increase in customs duty of various parts, including ignition wiring sets, safety glass and parts of signalling equipment to 15 percent with effect from February 2.

The parts would also attract agriculture infrastructure and development cess at the rate of 5 percent.

Currently, the parts attract customs duty in the range of 7.5-10 percent.

Ayukawa said the reduction in customs duty on some steel grades, and revoking of countervailing duty and anti-dumping duty on certain steel products is a welcome step.

"Since Platinum, Palladium and Rhodium are not available in India and are essential for emission control, their duty could have been made Nil," he added.

Ayukawa further noted that announcement of major highway projects with sizeable increase in infrastructure outlay will help revive demand for both commercial and private vehicles.

"The allocation for procurement of 20,000 buses will directly benefit the industry. The addition of 100 new districts to the city gas distribution network for natural gas will help clean, efficient and affordable mobility for the country," he added.