National Auto Policy: overall development of Indian auto industry

Proposed implementation of CAFE regulations, and emission-based taxation



The draft of National Auto Policy 2018 suggests adopting a long-term roadmap to decide emission standards after BS-VI and harmonize emission standards with global benchmarks by 2028. It also recommends Corporate Average Fuel Economy (CAFE) standards by 2025. It suggests that tax exemption will be given to cars based on length and CO2 emissions. The government plans to bring CO2 emissions down to 110 g/km by 2028.

The policy does ask for a definition of the long-term roadmap for incentives and infrastructure investments for green mobility.

The policy advocates the harmonization of standards over the next 5 years and evaluates accession to the UNECE WP.29 1958 agreement within the same period. It also suggests upgrading facilities and developing expertise at NATRiP, a testing agency, as per requirements for testing according to the Bharat New Vehicle Safety Assessment Program (BNVSAP). The policy also supports implementation of a vehicle scrapping policy - Voluntary Vehicle Modernization Program (V-VMP).

The Policy advises identification of critical components to be developed locally and harmonize AIS and BIS standards for these auto components. The Policy recommends lower import duties on capital goods, as well as equipment and machinery for the manufacturing of new technology components.

For research and development, the policy suggests to set-up a 'Technology Acquisition Fund' to acquire technologies through licensing agreements, joint ventures or acquisitions. It recommends tax exemption on different levels of R&D expenditure.

National Auto Policy 2018


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