While virtually addressing Gujarat’s Investor Summit today, on August 13, Prime Minister Narendra Modi announced the ‘ Voluntary Vehicle-Fleet Modernization Program’ or the old vehicle scrappage policy that aims at phasing out the vehicles that are older than 20 years (15 in case of commercial vehicles).
Union Minister for Road Transport and Highways Nitin Gadkari, who was present at the summit venued in Gujarat’s capital Gandhinagar, stated that the move is likely to lead to a reduction of raw material costs of new vehicles by around 40 per cent.
“Around 99 per cent of recovery (metal waste) can be done with regular scrapping. It will also bring down the cost of raw material by approx 40 percent. It will make components less expensive and increase our competitiveness in the international market,” Gadkari was quoted.
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What does the vehicle scrappage policy seek to achieve?
The new vehicle scrappage policy has two primary objectives — reducing the air pollution levels across the country and boosting India’s languishing automobile industry.
“The objectives of the policy are to reduce population of old and defective vehicles, achieve reduction in vehicular air pollutants to fulfil India’s climate commitments, improve road and vehicular safety, achieve better fuel efficiency, formalize the currently informal vehicle scrapping industry and boost availability of low-cost raw materials for automotive, steel and electronics industry,” the Press Information Bureau had stated on March 18 after Gadkari delivered a suo-motu statement in the Parliament on the vehicle scrappage policy.
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“The ecosystem is expected to attract additional investments of around Rs. 10,000 Crore and 35,000 job opportunities,” it added.
How will the scrapping of a vehicle be decided?
Any vehicle that’s older than 15 or 20 years (15 for private, 20 for commercial) will have to be examined for its emission and if it fails the ‘fitness test’ then it would be sent for scrapping.
While there is a possibility of passing the pollution fitness test, the cost of the test along with a renewal of the certificate for vehicle’s registration would reportedly cost about Rs 40,000. Also, the fitness test will have to be passed by the vehicle after five years.
When will the vehicle scrappage policy be implemented?
The vehicle scrappage policy has been in the making since 2015. However, the policy is not expected to be implemented before 2023-24.
“We propose to scrap vehicles, which are 15 years and over, owned by the Central and state governments by April 2022,” Giridhar Aramane, secretary in the road transport and highways ministry told the press.
“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, we plan to implement this from June 2024 onwards,” he added.
What are the incentives for the vehicle owners?
The scheme claims to provide ‘strong incentives’ to owners of old vehicles to scrap old and unfit vehicles through registered scrapping centres, which shall provide the owners with a scrapping certificate. Some of these incentives include:
- Scrap Value for the old vehicle given by the scrapping centre, which is approximately four to six per cent of ex-showroom price of a new vehicle.
- The state governments may be advised to offer a road- tax rebate of up to 25 per cent for personal vehicles and up to 15 per cent for commercial vehicles
- The vehicle manufacturers are also advised for providing a discount of five per cent on purchase of new vehicle against the scrapping certificate.
- In addition, the registration fees may also be waived for purchase of new vehicle against the scrapping certificate.
