In the wake of criticism in Parliament of the lack of focus in the country's three-year old automobile policy, the government has decided to formulate a new one that will be announced in the next four-five months.
The policy is expected to focus on promoting the use of small cars with the help of soft loans, lower road taxes and cheaper insurance.
It will chalk out a vision for the next 10 years for the Indian automobile sector. It will be steered by the development council for automobile and allied industries, under the ministry of heavy industries.
Deriving inspiration from China's automobile policy of 2004, the new policy will promote research and development.
"There may not be any special concession in terms of tariffs (excise, sales tax and Customs) but the next policy will look at improving the offtake of small cars in the country through special packages," said an official.
The 2002 policy had articulated the need for better infrastructure but had neglected micro details. "A parliamentary committee had, in 2004, questioned the effectiveness of the existing policy. Tariff concessions were part of the plan then, but the Cabinet committee had rejected it because tax sops ought to be decided by the Budget committee and not the development council," said the official.
Leading consultancy and research firms like the Boston consulting group and ICRA have shown interest in developing the next policy.
"At this stage the thinking in the ministry is to allow the industry to develop its own policy. A few working groups covering passenger vehicles, commercial vehicles and two- and three-wheelers have already been formed. These working groups will be headed by respective industry representatives. Once the draft policy is ready, we may take the help of external agencies to align it with best practices in the world," said government sources.
As for homologation and testing infrastructure, the new policy will take cue from the recent developments in China. The passenger vehicle production in China and India was at par in 1999.
But today, China produces twice the number of cars produced in India. Three new testing facilities in Hainan, Tianjin and Tong provinces around Beijing have been cited as good examples that India can emulate.
The digital automotive proving ground in Tong, spread over 6000 acres, is one of its kind in the world.
Change gears
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Policy expected to focus on promoting use of small cars with the help of soft loans, lower road taxes and cheaper insurance
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Inspired by China's Automobile Policy of 2004, the new policy will focus on R&D
- Consulting and research firms like Boston consulting group and ICRA have shown interest in developing policy
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