India is looking to bring in the vehicle scrappage policy soon — here’s what it means for you

• The reports that emerged from the closed-door meeting of the union minister of Road and Highways, Nitin Gadkari, and SIAM president, Kenichi Ayuwaka claim that the auto industry had proposed certain sales incentives and tax rebates for the government to review.
• The scrappage policy aims at phasing-out old vehicles, which end up polluting the environment.
• Apart from environmental concerns, the policy also aims to increase demand in the market.

The much-awaited vehicle scrappage policy may soon be a reality for Indian automakers. According to an ET report, in a closed-door meeting, the union minister of Road and Highways, Nitin Gadkari, met SIAM president Kenichi Ayuwaka to discuss the various issues surrounding the auto industry and the new scrappage policy was one of them.

The reports claim that the auto industry had proposed certain sales incentives and tax rebates for the government to review. It also indicated that another meeting is likely next week to review these discussions.

What is vehicle scrappage policy?

In July 2019, the Central government had proposed amendments to the motor vehicle rules to allow scrapping of vehicles older than 15 years. The scrappage policy is meant to flush out old cars running on the roads and aim at phasing-out these old vehicles, which end up polluting the environment.

Further, in a draft notification, the government proposed renewing fitness certificates for vehicles older than 15 years every six months instead of the current one year. Under this policy’s norms, owners with a commercial vehicle older than 15 years and private vehicle owners with vehicles older than 20 years, could be considered for scrapping their old vehicles.

Move aims to boost demand and cut down on steel imports

Apart from environmental concerns, the policy is also aimed at increasing demand in the market. That is why the centre has proposed OEM’s to offer certain discounts on the new vehicles purchased after scrapping an old one.

The policy will reduce the dependency on steel imports as the steel and other metal deposits from the scrapped cars will minorly be cutting down the metal imports year by year.

How can this policy benefit the vehicle owners?

With the resale value of vehicles beyond 15-20 years being extremely low, this policy will provide monetary compensation to owners for sending those vehicles to the scrapyard. The other benefit being that the government is still mulling is for automakers to offer incentives to new buyers for scrapping their old vehicles. Reports suggest that carmakers have agreed to a proposal of offering 1% discount to new buyers.

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