The transport division of the union urban development ministry is swarmed by a plethora of proposals that can adversely affect the consumers and car manufacturers, alike. One such proposal is to impose tax on every second car owned by an individual, who will be required to pay Value Added Tax (VAT) and a cess over as well as above road tax for the same. The proposed suggestions can be a major let down for the car manufacturing companies in metropolitans city like Delhi and Mumbai. In such cities, where 30-40 lacs cars glide over the roads, would be highly impacted by the new policies of the state government.
The government feels that the new proposal will assist it in attaining the long term goal of reducing the use of private vehicles. This objective of the centre is targeted at reducing the congestion in the city and promoting the usage of public transportation, owing to the relative increase in the traffic.
Another regulation being laid down by the government is the mandatory renewal of the driving license every year. This could further harm the auto industry if the government lays a consensus over this proposal. As of now, driving licenses comes with tenure of 10-20 years and after the mentioned period the license is supposed to be renewed. To successfully enforce the new policy, government is required to ensure the strict enforcement of traffic regulations. Administration is also planning to generate more revenues by means of the license fee. The idea has been borrowed from Brazil's infrastructure where the funds generated by the license fee are utilised to perk up the transportation infrastructure in the urban towns.
