The government has made a new proposal to increase the vehicle registration and renewal charges in an effort to discourage the sale of petrol and diesel vehicles.
The Indian auto industry has been experiencing declining sales since the last year and its been more than nine months the conditions have been so. Just when all automakers were demanding GST rates to be cut down to keep prices in check, the government has proposed for a substantial increment in the vehicle registration charges. This may lead to a further slow down of an already struggling automotive segment.
According to this new proposal, new car buyers will have to pay Rs. 5,000 instead of the mere current Rs. 600 to register their vehicles. To renew the registration of a 15-year old vehicle, it would cost Rs. 10,000. As for two-wheeler buyers who had been paying Rs. 50 to register a new motorcycle, the new proposal would require them to pay Rs. 1,000. To get an old two-wheeler renewed, the charges are Rs. 2,000.
Fleet operators who has been paying just Rs. 1,000 for commercial vehicle registration would have to pay Rs. 10,000 for registering a new vehicle and Rs. 20,000 for renewing the registration of an old one. As for imported vehicles, the registration charges of such vehicles would be going up to Rs. 20,000 from Rs 2,500. The government has also proposed frequent fitness test for petrol and diesel vehicles which are over 15 years old. Renewing their registration will only be allowed after they comply with the fitness norms.
These steps are primarily coming across to discourage the sales of petrol and diesel vehicles. The government has already shifted its focus to electric vehicles and in that context, has been allowing several benefits to electric car buyers as well. Earlier, it had even proposed to exempt EVs from registration charges. It had also proposed several tax benefits to electric car buyers and tax rebates to EV makers as well. Even scrappage of old vehicles have been proposed to be incentivized. Car owners who give away their old vehicles for scrappage will be issued a benefit certificate which will exempt them from paying the registration charges.
The Indian automobile industry is going through a major transformation with the coming of new emission and safety standard. All manufacturers have invested heavily in the process. Increased input costs along with other factors like one time insurance payment, liquidity crunch and low credit availability have already led to increase in prices. This has put down customer sentiments which has ultimately led to declining sales. With the increase in vehicle registration charges, its going to further affect the industry, possibly hampering festive season sales and pre-buying which were expected before new norms kick-in.