How Government Policies Shape the Indian Auto Sector

Emission norms

India moved directly from BS-IV to BS-VI emission norms in April 2020, with a further real-driving-emissions phase from 2023. This raised costs, particularly for small diesel engines, and many manufacturers dropped them.

Safety regulations

Mandatory requirements such as dual front airbags, ABS and seatbelt reminders have improved baseline safety. The Bharat NCAP programme, launched in 2023, gives buyers an official crash-test reference.

Electric vehicle support

Central schemes (such as the FAME programme and its successors) and many state EV policies have offered purchase incentives, lower road tax and support for charging infrastructure. Lower GST on EVs than on combustion vehicles also helps. Incentives change frequently — check current terms before buying.

Manufacturing incentives

Production Linked Incentive (PLI) schemes for automobiles, components and advanced batteries aim to grow local manufacturing and exports.

Vehicle scrappage policy

The national vehicle scrappage policy encourages replacing old, unfit vehicles through registered scrapping facilities, with benefits such as registration and road-tax concessions on a new vehicle in many states.

What it means for buyers

• Check state road-tax rules before buying, especially for EVs
• Expect safety equipment to keep improving across segments
• Older vehicles may face fitness-test and city-specific restrictions