Vehicle Scrappage Policy

Recently, the Union Transport Minister announced the much awaited vehicle scrappage policy.

The new policy is aimed at boosting the auto industry, which was facing a slump even before the pandemic

Vehicle owners and potential buyers will also be impacted by the policy by keeping the old polluting vehicles from plying on roads.

As of now, there are around 51 lakh vehicles in India which are older than 20 years, 34 lakh vehicles which are more than 15 years old and around 17 lakh vehicles older than 15 years, but do not have vehicle fitness certificates.
The old vehicles pollute air 10-12 times more compared to vehicles that are fit, and also pose a risk for road safety.
There is a greater need for shift to new vehicles as it will lead to lower fuel consumption which may result in lower maintenance cost which is a major expenditure for the vehicle owners.
The low cost materials obtained from the scrap can be used for various other industries like steel and other rare earth materials and may further bring the informal scrapping sector into the formal scrapping sector.
The new vehicle scrappage policy will be a win-win proposal for the auto industry as scrapping old vehicles will lead to increased demands for newer vehicles, which will boost the auto sector and will result in increased GST collection for both centre and states.
The policy will give a boost to new technologies with better mileage of vehicles besides promoting green fuel and electricity and cut on India’s huge ₹10 lakh crore crude import bills.
India could emerge as a hub for automobile manufacturing as key raw material available from scrapping like steel, aluminium and plastic are bound to be recycled, bringing down automobile prices by 20-30 per cent.

Under the voluntary vehicle scrapping policy, personal vehicles would undergo fitness tests after 20 years while commercial vehicles would require it after completion of 15 years.

Buyers of new vehicles after opting for scrapping of their old and polluting vehicles will be offered incentives and rebates under the new policy to phase out old and polluting vehicles.
There are provisions of green taxes, other levies and such vehicles will have to undergo strict fitness tests in automated facilities.
Automated fitness tests will be set up under PPP mode while for scrapping centres also private partners and state governments will be assisted.
Driving such vehicles that fail to pass automated tests will attract huge penalties and also be impounded.

The policy will lead to new investments of around ₹10,000 crore and create as many as 50,000 jobs and the automobile industry will turn into one such sector that will offer maximum employment.

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