Minister of Road Transport and Highways, Nitin Gadkari announced the vehicle Scrappage Policy in Lok Sabha today. According to the union minister, the much-awaited scrappage policy will be a big boost for the auto sector by removing polluting vehicles off Indian roads. In a bid to encourage the scrappage of old vehicles, the minister has also said that the government will offer a rebate on road tax, discounts and more. The voluntary vehicle scrappage policy was first announced in the Union Budget 2021-22 and will be implemented in a calibrated manner from 2022 onwards.
Gadkari said that all vehicles will have to go through a mandatory fitness test once the registration period of the vehicle ends. Under the scrappage policy, a passenger vehicle’s age has been restricted to 20 years, while that of commercial vehicles will be 15 years. Should the vehicle fail the fitness test, it will be deemed as an “end-of-life”. Meanwhile, owners will be encouraged to voluntarily scrap the vehicles at the end-of-life instead of applying for a re-registration.
Furthermore, automated fitness centres will be established throughout the country to ease scrapping vehicles. Gadkari suggested that a scrap value of 4-6 per cent will be given to the owner, should they choose to scrap the vehicle. In addition, a rebate of up to 25 per cent will be given in road tax on buying a new vehicle.
Vehicle manufacturers will be advised to give a five per cent discount to owners that show a scrapping certificate. The total benefits then will be about 10-15 per cent in exchange for the scrapped vehicle.
In his presentation, Gadkari explained that driving vehicles that do not pass the automated fitness tests will attract huge penalties and will also be impounded.
“This policy is going to be a boon for the automobile sector, making it one of the most profitable sectors which in turn would generate huge employment,” Gadkari added further.
The policy is expected to bring a much-needed boost for the auto sector, which has been struggling over nearly two fiscals now. Gadkari said that the scrappage policy will lead to a 30 per cent growth in the Indian automobile industry.
Reacting to the announcement, Vinkesh Gulati, President – Federation of Automobile Dealers Associations (FADA) said, “Indian automobile industry has already upgraded to one of the most advanced emission standards. While new vehicles will be least polluting, vehicles that are old creates enormous pollution with the least safety standards will now be eligible for scrappage thus making roads safer and air cleaner. The guidelines and advice announced today are in the right direction and now, the State Governments and OEMs have to do their part to make it a success. It will also revive the ailing CV segment and in turn will boost State exchequer’s revenue on sale of new vehicles.”
The fitness test rules and scrapping centres will come into effect from October 1, 2021. The scrapping of government and PSU vehicles above 15 years of age will be undertaken from April 1, 2022. Mandatory fitness testing for heavy commercial vehicles will be effective from April 1, 2023. The mandatory fitness testing for other categories will come into effect in a phased manner from June 1, 2024.
The draft notification of the scrapping policy will be published in the next few weeks. “At present, about 17 lakh medium and heavy commercial vehicles are older than 15 years without a fitness certificate,” added Gadkari.