Exclusive: Bad news for Auto sector! Govt not ready to accept 1 pct scrappage incentive; wants 4-6 pct
The Narendra Modi government is not ready to accept the 1 per cent incentive offered by the auto manufacturers in the most awaited scrappage policy, sources told Zee Business.
The Narendra Modi government is not ready to accept the 1 per cent incentive offered by the auto manufacturers in the most awaited scrappage policy, sources told Zee Business. It has been revealed that the government wants to favour consumers and has asked auto manufacturers to meet the global standards of 4-6 per cent scrappage incentive. In fact, the central government has also made up its mind that the scrappage policy won't figure in coming Modi Cabinet meeting.
Govt Wants More For Consumers
Analysing the meaning of this deadlock between the auto makers and the central government, Zee Business Managing Editor Anil Singhvi said, "This ruckus over he scrappage incentive clearly indicates that government wants more for the auto customers while auto-makers are looking for greater advantage for themselves."
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What Does Scrappage Incentive Mean For Consumers
He said that scrappage incentive means if a person buys another vehicle after the expiry of the time period of the earlier vehicle, then the auto company will have to give incentives and this is called scrappage incentive. The auto companies are of the opinion that the scrappage policy won't have much impact on its sales while the government is of the opinion that once the scrappage policy is implemented, there will be huge jump in the vehicle sales of the auto makers.
On what could be the possible outcome, if the deadlock is not resolved the Market Guru said, "The Minister for Roads and Surface Transport Nitin Gadkari is quite vocal about the scrappage policy and if the deadlock is not resolved, then the scrappage policy may get implemented directly from the Prime Minister's Office (PMO) without any consultation in the cabinet meeting. In that case, government's decision on the scrappage incentive will be final and auto manufacturers will be bound to implement that."
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#ZBizExclusive | ऑटो सेक्टर के लिए निगेटिव खबर...स्क्रैपेज पॉलिसी के तहत 1% इंसेंटिव पर सहमत नहीं सरकार, ग्लोबल स्टैंडर्ड के हिसाब से 4-6% इंसेंटिव की मंशा: सूत्र
— Zee Business (@ZeeBusiness) July 24, 2020
Takeaway for Investors
For stock market investors, this means that till the deadlock continues, auto sector stocks will feel the heat and fresh buying in will definitely get affected.
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