Voluntary vehicle scrapping policy to phase out old and unfit vehicles has been announced in the Union Budget on Monday.
Finance Minister Nirmala Sitharaman announced that vehicles will undergo fitness test in automated fitness centres after 20 years (personal vehicles) and 15 years (commercial vehicles).
Tata Motors stock was up by 1.92 per cent while Ashok Leyland stock was up by 3.48 per cent.
This was widely expected in the Budget and this is with an aim to boost automobile demand by phasing out old, polluting vehicles.
This is expected to benefit companies like Tata Motors, Ashok Leyland, Maruti and Shriram Transport.
The auto industry had held several engagements with the government at various levels, where specific suggestions were made for demand stimulus including reduction in base GST rates from 28 per cent to 18 per cent for a limited period and an incentive based vehicle scrappage policy, which would have made it a less painful revival and kick started the industry.