Earlier this month, the Ministry of Road Transport and Highways (MoRTH), came up with the much-awaited vehicle scrappage policy. This development comes on the back of Finance Minister Nirmala Sitharaman’s budget 2021 speech in which she talked about the voluntary scrapping policy.
Nirmala Sitharaman said that the scrapping scheme that will have been put into place will be used on a compulsory fitness test that all the concerned vehicles will have to undergo at an automated fitness centre. This test will be conducted on all private vehicles 20 years of age and on all commercial vehicles 15 years of age. Reacting to this, the Federation of Automobile Dealers Associations (FADA), the apex body representing automobile dealers across India, has said that there as many as 6 lakh old vehicles that are currently plying on Indian roads if we take 1990 as the base year. As per some data provided by FADA, about 37 lakh commercial vehicles and 52 lakh private vehicles are eligible for this voluntary scrappage. Given below is a statement issued by FADA on the scrappage policy-
“The Central Government had announced scrappage policy during the budget speech of Hon’ble Finance Minister Shri Nirmala Sitharaman ji. Only fine prints of the same were awaited which today, has been announced by Shri Nitin Gadkari ji.
Indian automobile industry has already upgraded to one of the most advanced emission standards. While new vehicles will be least polluting, vehicles which are old creates enormous pollution with least safety standards will now be eligible for scrappage thus making roads safer and air cleaner. The guidelines and advice announced today are in the right direction and now, the State Governments and OEMs have to do their part to make it a success.
Scrappage value of the vehicle will be in a range of 4-6% of the ex-showroom price, rebate of upto 25% for PV and 15% for CV by State Governments on Road Tax, 5% discount from OEM’s on new vehicle and registration fee being waived off will definitely help to excite the customer and motivate him to scrap his old vehicle. It will also revive the ailing CV segment and in turn will boost State exchequer’s revenue on the sale of new vehicles.”
Other than this, the Society of Indian Automobile Manufacturers (SIAM) will also work in tandem with the Ministry of Road Transport & Highways for the successful implementation of the scheme. It will work on issues like the best method to expedite the testing infrastructure in a sustainable manner, initiate fitness testing earlier in the life cycle of private vehicles, explore the possibility of compulsory fitness-based deregistration versus voluntary incentive/disincentive based scrapping.