No country for old vehicles: All you need to know about scrappage policy

Finance Minister Nirmala Sitharaman on Monday announced a voluntary vehicle scrapping policy in Union Budget 2021 where vehicles will undergo fit test. The scrappage policy could take old vehicles off roads which could, in turn, result in lower emissions, better fuel efficiency and a boost to the automobile manufacturing sector owing to increase in demand.

Vehicle scrappage as a policy has been active in several countries and its multi-faceted benefits have been repeatedly highlighted. It is a policy that the Indian automobile industry has also been eyeing for some time now. In fact, several industry leaders had time and again urged the government to move forward with this.

Sitharaman, during her Union Budget 2021 presentation, highlighted the details of the vehicle scrappage policy. "We are separately announcing a voluntary vehicle scrapping policy to phase out old and unfit vehicles," she said. "This will help encourage fuel-efficient and environment-friendly vehicles, thereby reducing vehicular pollution and oil import bills."

The Finance Minister went on to explain that personal vehicles will undergo fitness tests at automated centres after completing 20 years. This is 15 years in the case of commercial vehicles. "Details of the scheme will be separately shared by the ministry," she added.

Previously, Union Minister Nitin Gadkari had approved a proposal for green tax on old and polluting vehicles. There could be some incentives given to owners of such vehicles to trade in these for newer options. (Full report here)