Incentive Of 5% On New Car Purchase For Scrapping Old Under Vehicle Scrappage Policy: Gadkari

The vehicle scrappage policy was announced during the 2021 Union Budget by Finance Minister Nirmala Sitharaman. The Union Ministry Nitin Gadkari has always emphasised that the scrappage policy will be a game-changer for the Indian automotive industry. According to a report from PTI, the transport minister now said that owners who scrap their old vehicles will receive a rebate of about five per cent from the manufacturer while purchasing a new vehicle under the scrappage policy. The minister had previously stated that owners scrapping their old vehicles will get some benefits from the manufacturers. However, the minister made no mention about when it will come into force.

Also Read: Vehicle Scrappage Policy: What It Means For Existing Car Owners​

Nitin Gadkari said that buyers of new vehicles opting to scrap their old cars will receive rebate of 5 per cent from manufacturer.

Nitin Gadkari, Road Transport, Highways and MSMEs Minister Gadkari told PTI, "Automobile manufacturers will provide about 5 per cent rebate on new car purchases" to the consumers in lieu of scrapping of the old. There are four major components of the policy...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. For this automated fitness centres would be required throughout in the country and we are working in that direction."

As per the new scrappage policy, personal vehicles will have to undergo a fitness test after completion of 20 years whereas commercial vehicles will be required to carry out fitness test after 15 years.

He further mentioned that the automated fitness tests will be set up under public-private partnership (PPP) mode, while the government will assist private partners and state governments for scrapping centres. Vehicles that fail to pass these automated tests will be penalised and also be impounded.

The vehicle scrappage policy is believed as one of the most important steps to boost the Indian automobile space, which has been impacted majorly by the covid-19 pandemic. It would lead to a 30 per cent boost to the Indian automobile industry turnover to Rs 10 lakh crore in the years to come from the present about Rs 4.5 lakh crore, said Nitin Gadkari.

Also Read: New Vehicle Buyers Will Get Benefits For Opting To Scrap Old Vehicles Under Scrappage Policy, Says Gadkari​

Cars old than 20 years and commercial vehicles older than 15 years will be eligible for voluntary scrapping

He added, "This policy will result in an increase in vehicle demand which in turn would boost revenue. Also, ancillary industries would come up in large numbers thriving on junk vehicles."

Moreover, he said initially around one crore polluting vehicles would go for scrapping. Out of this estimated number, 51 lakh units will be light motor vehicles (LMVs) that are above 20 years of age and another 34 lakh LMVs that are above 15 years. The policy would also cover 17 lakh medium and heavy motor vehicles, which are above 15 years, and currently without valid fitness certificates.

He further added, "Structure and framework of scrapping policy is under work and green tax has already been notified. Many states have notified in ineffective way. We want to advise the state governments through notification under Motor Vehicles Act to consider imposing green tax on older vehicles which cause more pollution," Road Transport and Highways Secretary Giridhar Aramane had said last month.