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Vehicle scrappage policy has the potential of putting old polluting vehicles off roads to help environment as well as boost demand for new vehicles.
Vehicle scrappage policy has the potential of putting old polluting vehicles off roads to help environment as well as boost demand for new vehicles.

Rebate of 5% on new car purchase under Vehicle Scrappage Policy: Nitin Gadkari

  • Under the Vehicle Scrappage Policy, personal vehicles will undergo fitness test after 20 years while commercial vehicles would require it after completion of 15 years.

Union minister Nitin Gadkari has said that consumers who junk their old vehicle and buy a new one under the Vehicle Scrapping Policy will give about 5 per cent rebate from auto companies on the new purchase.

The voluntary vehicle scrapping policy was announced in February this year during the Union Budget for 2021-22.

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It has been touted as a major step to boost the country's automobile sector which is reeling under the adverse impact of the Covid-19 pandemic. Highlighting other benefits of the scheme, Gadkari told PTI, "Apart from rebate, there are provisions of green taxes and other levies on old polluting vehicles. These will be required to undergo mandatory fitness and pollution tests in automated facilities."

Under the policy, personal vehicles will undergo fitness test after 20 years while commercial vehicles would require it after completion of 15 years. These automated fitness tests will be set up under public private partnership (PPP) mode and 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.

The scrappage scheme is expected to lead to a 30 per cent boost to the Indian automobile industry's turnover to 10 lakh crore in the years as compared to the current 4.5 lakh crore, the minister said. The export component of this which at present is 1.45 lakh crore will go up to 3 lakh crore, he added. "Once the policy comes to practice, availability of scrapped material like steel, plastic, rubber, aluminium, etc. will be used in manufacturing of automobile parts which in turn will reduce their cost by 30-40 per cent."

(Also read | Vehicle scrapping plan will create jobs, lower costs: Nitin Gadkari)

The scrappage policy is further expected to give a boost to new technologies with better mileage of vehicles besides promoting green fuel and electricity. It could also reduce India's 8 lakh crore crude import bill which is likely to increase to about 18 lakh crore.

(with inputs from PTI)

  • First Published Date : 07 Mar 2021, 05:41 PM IST