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GS-III : Economic Issues Automobile policy

24 November, 2021
7 Min Read

Vehicle Scrapping Policy 2021

Road Transport and Highways Ministry announced the Voluntary vehicle fleet modernisation programme. The programme is also known as the Vehicle scrapping policy.

Why in news?

Prime Minister Narendra Modi unveiled the National Automobile Scrappage Policy and said the initiative will promote a circular economy and make the process of economic development more sustainable and environmentally friendly.
The policy, aimed at recycling old and unfit vehicles, will give a new identity to India’s mobility and auto sector, Mr Modi said in his address while virtually unveiling the initiative during an ‘Investors Summit’ organised in Gandhinagar.
The summit, which saw the participation of potential investors and industry players, was organised to attract investment for setting up vehicle-scrapping infrastructure under the Voluntary Vehicle Fleet Modernisation Programme, as per an official release. “This policy will play a major role in removing unfit vehicles from our roads in a scientific manner. It will modernise the vehicular population on our city roads,” he added.
Under this policy, people who give their old vehicles for turning them into scrap will be given a certificate by the government, he said.
People having this certificate will not be charged any registration fee on the purchase of a new vehicle, said Mr Modi, adding that such vehicle owners will also be entitled to some rebate on road tax.
The policy would attract an investment of Rs. 10,000 crores and create thousands of employment opportunities, he said.

Aim of the Policy:

The policy is aimed at creating an ecosystem to phase out unfit and polluting vehicles.
It will reduce pollution, improve fuel efficiency and increase the government’s revenue collection from the sale of new vehicles.
The policy will kick in for government vehicles from April 1, 2022.

Key Features of the Policy:

A vehicle has to undergo fitness tests after 20 years in the case of privately owned vehicles and 15 years in the case of commercial vehicles.
Any vehicle that fails the fitness test or fails to renew its registration certificate may be declared as an End of Life Vehicle.
Vehicle re-registration fees will be increased to discourage people from running old vehicles.
Automated fitness centres will be established throughout the country to ease vehicle scrapping.
All government vehicles will be de-registered after 15 years.
Vintage cars will be exempted from this policy and separate guidelines will be formulated to regulate them.

Incentives for Scrapping:

A vehicles scrap value of the ex-showroom price of the vehicle ranging from 4-6% will be given to the owner if they choose to vehicle scrap policy
A rebate of up to 25% will be given on Road Tax
Vehicle manufacturers will be advised to give a 5% discount on new vehicles against a scrapping certificate.

Source: TH

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