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India Finally Welcomes the Vehicle Scrappage Policy: All You Need To Know

Finance Minister Nirmala Sitharaman earlier this year spoke about the vehicle scrappage policy while announcing Budget 2021. The Union Minister of Road Transport and Highways, Nitin Gadkari also announced the government is working on the vehicle scrappage policy and the details shall be shared soon.

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An outline of the Vehicle scrappage policy has finally been shared by Gadkari to revive the automotive industry. Here’s a closer look at some of the key information about the scrappage policy:

  • People who scrap their old vehicles shall get a sum equal to four to six per cent of the ex-showroom cost of the new vehicle along with a scrapping certificate
  • The policy advises automakers to offer a discount of about 5% shall be given to customers having a scrapping certificate
  • Interestingly, the policy suggests and not mandates the state government to give allowances to people scraping their old vehicles by lowering the road tax and registration fee
  • It is mandatory for personal vehicles after 20 years and commercial vehicles after 15 years of registration to undergo the fitness test
  • The tests would be conducted by the automatic fitness centres and if failed in the test, the policy proposes de-registering of the vehicle

The mandatory test of personal vehicles shall start from June 2024 whereas for commercial vehicles it is expected to begin from April 2023. The government’s attempts to limit the use of older vehicles don’t end there. Apparently, the Ministry of Road Transport and Highways has also released a notification for increasing the RC renewal in India with an objective to discourage the re-registration of old vehicles.

The Vehicle’ scrappage policy is likely to boost sales of heavy and medium commercial vehicles. However, the policy has been getting mixed opinions from the people working in different sections of the industry. Pretty much everyone is satisfied with it, but, the trucking industry is not entirely happy with the new scrappage policy. The country’s trucking industry believes that the policy might put an exceptional strain that would cause a lot of truck drivers/owners to go out of business.

M.R. Kumaraswamy, President of State Lorry Owners Federation shared his thoughts, “The freight rates are not lucrative for them to scrap their old vehicles and go for new vehicles. The EMI (equated monthly installment) for a new truck will be about Rs 50,000 which will not be affordable by such operators.”

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