Home > Auto > News > Budget 2021: Vehicle scrappage policy announced by Nirmala Sitharaman

The government has proposed the much-awaited vehicle scrapping policy. Finance Minister Nirmala Sitharaman made the announcement today while presenting the Budget 2021-22.

The vehicle scrappage policy is claimed to be bringing 43,000 crore business opportunity by boosting consumption in the auto industry and helping the environment.

(Also read - No country for old vehicles: All you need to know about scrappage policy)

Addressing the House, Sitharaman said, “We are separately announcing a voluntary vehicle scrapping policy to phase out old and unfit vehicles. This will help encourage fuel-efficient and environment-friendly vehicles, thereby reducing vehicular pollution and oil import bills."

She then went on to give a brief idea about how the policy will work. “Vehicles would undergo fitness tests in automated fitness centres after 20 years in case of personal vehicles, and after 15 years in case of commercial vehicles."

To put it simply, the vehicle scrappage policy aims to take out the old polluting vehicles from Indian roads and send them to the scrapyard. With the vehicles older than 15 years have very low resale value and polluting the environment at a larger scale, sending them to scrapyards will offer the owners a monetary compensation, which will help them to buy a new vehicle.

(Also read: Vehicle scrapping policy will reduce pollution, boost auto sector, says Nitin Gadkari)

This will help the environment and create demand in the auto industry. Also, it will enhance the recycling industry as well. With metals and other materials available for recycling, they can be used to produce new products including new vehicles as well.

“Details of the scheme will be separately shared by the ministry," said Sitharaman.

Vehicle scrappage policy is one of the most discussed issues, long-delayed and much-awaited scheme in the Indian auto industry for the last several months. Few days ago, Union Minister for Road, Transport and Highways Nitin Gadkari had approved the scrappage policy of Government department and PSU vehicles that are older than 15-years.

(Also read: FADA welcomes vehicle scrappage policy announced in Budget 2021)

The policy will be effective from 1st April 2022, MoRTH had said in a statement. According to MoRTH, once the vehicle scrappage policy is approved, India will become an automobile manufacturing hub and prices of the vehicles will be reduced. The policy will not only help the auto industry but other sectors involved in the ecosystem as well.