Nitin Gadkari announces vehicle scrappage policy

The vehicle scrapping policy will offer about 5 per cent rebate to those buying new cars if they junk their old vehicles, Union minister Nitin Gadkari said in Rajya Sabha on Thursday terming it a “win-win” situation.

The voluntary vehicle scrapping policy announced in the Union Budget for 2021-22 provides for fitness test after 20 years for personal vehicles while commercial vehicles would require it after the completion of 15 years.

“The ‘Voluntary Vehicle-Fleet Modernisation Programme’ or ‘Vehicle Scrapping Policy’ will offer a rebate of about 5 per cent to buyers on new car purchases in lieu of scrapping of the old. The vehicle manufacturers are advised for providing a discount of 5 per cent on purchase of new vehicle against the scrapping certificate,” road transport, highways and MSMEs minister Gakdari said in the upper house.

With the scrapping policy, raw materials like plastic, aluminium, steel,copper, would be recycled and will become a lesser cost component for the automotive industry. “Scrap material will create a lot of value addition,” he said.

Gadkari also said that states can also make registration fees and road tax lower, as then people will be encouraged to buy new vehicles which will also result in more sales for the automobile industry.

“The scheme shall provide strong incentives to owners of old vehicles to scrap old and unfit vehicles through registered scrapping centres, which shall provide the owners with a scrapping certificate,” Gadkari said.

Some of these incentives include; scrap value for the old vehicle given by the scrapping centre, which is approximately 4-6% of ex-showroom price of a new vehicle; a possible road- tax rebate of up to 25% for personal vehicles and up to 15% for commercial vehicles; a possible discount of 5% on purchase of new vehicle against the scrapping certificate, the policy states. It also states that the registration fees may also be waived for purchase of a new vehicle against the scrapping certificate.

“Today automobile industry’s annual turnover is ₹4.5 lakh crore. With the scrappage policy, in five years that number can become ₹10 lakh crore. In turn, With the increase in sales, state and centre will also benefit from the GST revenue,” he said.