Nitin Gadkari announces vehicle scrappage policy: Five things to note
Vehicle scrappage policy has been a long time coming and Union Minister Nitin Gadkari recently made the details known in Parliament. Speaking at length about the vehicle scrappage policy, Gadkari outlined how it has the potential to put old and polluting vehicles off Indian roads. He also added that it is likely to boost growth in the auto sector.
But what are the finer points of the much-awaited vehicle scrappage policy and why it could be a shot in the arm for owners of old vehicles as well as auto manufacturers, while also being a cause for celebration among environmentalists?
Here are five key things to note about vehicle scrappage policy:
Drive no more:
According to Gadkari, there are around 51 lakh vehicles older than 20 years on Indian roads. There are another 34 lakh vehicles which are more than 15 years old and around 17 lakh vehicles, older than 15 years, but which do not have vehicle fitness certificate.
The idea is to confine these vehicles to the side because not only are the chances of these vehicles emitting toxic fumes higher - often 10 to 12 times more than newer vehicles, but these also pose a threat to road safety.
What's in it for you:
If someone has a private vehicle older than 20 years, he or she will have to get a vehicle fitness certificate for it in order for the vehicle to be legally allowed to continue running on roads here. It is 15 years for commercial vehicle.
Gadkari says that the idea is to discourage people from opting for vehicle fitness certificates for such vehicles.
A vehicle failing the fitness test or failing to get a renewal of its registration certificate may be declared as End of Life Vehicle.
What does it mean for the auto industry:
Apart from the obvious impact of a boost in demand for newer vehicles, the scrappage policy is also likely to bring down cost of components as some of these can be recycled.
The incentives and the benefits:
The details of incentives for sending an old vehicle to the scrapyard and buying a new one aren't yet known but Gadkari has outlined that discounts on registration and road tax can be something that state governments consider for an owner of an old vehicle opting for a new one by sending the existing vehicle to the scrapyard.
"We have issued an advisory to all vehicle manufacturers to offer 5 per cent discount while selling a new vehicle against a scrapping certificate," Gadkari added.
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Automated fitness tests will be set up as the government will assist private partners and state governments for scrapping centres. Vehicles that fail the automated tests will be penalized with massive fines and also be impounded.