Vehicle Scrappage Policy: Prime Minister Narendra Modi, on August 13, 2021, launched the Voluntary Vehicle Fleet Modernisation Programme, or the automobile scrappage policy.
He launched the National Automobile Scrappage Policy through video conferencing during the Investor Summit 2021, in Gujarat.
- This policy aims to phase out old and unfit vehicles in an environment-friendly manner.
- It is in line with India’s goal for the 21st century to achieve clean, congestion-free and convenient mobility.
- It seeks to create a viable circular economy and bring value for all stakeholders.
- The National Vehicle Scrappage Policy is also dubbed as a “voluntary vehicle-fleet modernization programme”.
- Under the policy, vehicles will be scientifically tested through authorized and automated centers before it is finally scrapped.
- Commercial vehicles that are over 15 years old and personal vehicles that are more than 20 years old will be eligible for scrapping.
- The policy will be first implemented for government-owned vehicles, and then for heavy commercial and personal vehicles.
- From 2023 onwards, heavy commercial vehicles need to be scrapped if they do not conform to the fitness level prescribed under the rules.
- For personal vehicles, the Govt. plans to implement this from June 2024 onwards.
- This Policy has several economic and environmental benefits.
- The vehicle scrappage policy will bring in investments of around INR 10,000 crore to set up 450-500 Automated Testing Stations (ATS) and 60-70 Registered Vehicle Scrapping Facilities (RVSF) across the country.
- A single window clearance portal is being developed where the applications for ATS and RVSF will be catered through a single portal within 60 days.
- The cost of raw material by approx 40 percent as 99 percent of recovery of metal waste can be done with regular scrapping.
- This, in turn, will make the components less expensive and increase competitiveness in the international market.
- With the increased sales of automobiles, the government will get a profit of Rs 30,000-40,000 cr in GST.
- The state government will also get a profit of Rs 30,000-40,000 cr in GST.
- It will also promote the self-reliance of India in the auto sector and metal sector.
- It will generate about 50000 direct and indirect employments.
- Currently, India has 10 million cars without valid fitness parameters that add to pollution and fuel costs. Thus, the replacement of old vehicles will positively benefit the environment.
- The policy will play a big role in modernizing and phasing out the old polluting vehicles in an environment-friendly manner.
Incentives for scrapping old vehicles:
The incentives are as follows:
- The owners of such vehicles will get a scrap value which will be equivalent to 4 – 6 percent of the ex-showroom price of the new vehicle that they would be purchasing.
- There will be zero registration fees for a new vehicle purchased if the owner shows a certificate of deposit.
- The state governments have been asked to offer concessions on motor vehicle tax. The concessions include up to 25 percent for non-transport vehicles and up to 15 percent for transport vehicles.
- The vehicle manufacturers have been advised to provide a 5 percent discount on the purchase of a new vehicle against a certificate of deposit.