Union Budget 2021: Voluntary Vehicle Scrappage Policy To Be Announced Soon

In her presentation of the Union Budget 2021, Nirmala Sitharaman, India's Finance Minister, said "“We are separately announcing a voluntary vehicle scrapping policy to phase out old and unfit vehicles. This will help encourage fuel-efficient and environment-friendly vehicles, thereby reducing vehicular pollution and oil import bills. More details will be shared soon by the Ministry." She said this will promote fuel-efficient and environment friendly vehicles while cutting on India''s huge import bills. The proposed scrappage policy says that if a vehicle fails the fitness test more than thrice, it might be subjected to mandatory scrapping, according to the proposed policy. That said, the government is yet to roll out the final scrappage policy. Setting up of vehicle scrapping facilities, is a different issue altogether.

Under the proposed Scrappage Policy, 51 lakh vehicles in India are currently over 20 years old and 34 lakh vehicles in the country are over 15 years old,and these vehicles have the potential to be scrapped, thereby reducing vehicular pollution by up to 25 per cent. The scrapped vehicles have the potential for providing raw materials after being recycled.

Union Minister Nitin Gadkari has already sent a Scrappage Policy proposal to the government, for scrutiny. This announcement comes right after government's announcement of a scrappage policy for vehicles used by its various departments and public sector undertakings (PSUs). The Ministry of Road Transport and Highways (MoRTH) on Monday approved the vehicle scrappage policy for vehicles owned by the government and PSU which are older than 15 years. This policy would apply to central and state government-owned vehicles effective from April 1, 2022.

Also Read: Scrappage Policy For Government Vehicles Approved

The voluntary scrappage policy will be based on fitness tests and for private vehicles, the life has been set at 20 years, while for commercial vehicles, the life is set at 15 years. More details will be shared by the Ministry of Road Transport and Highways soon. The government believes that the scrappage policy will encourage sales of new vehicles. Major automotive manufacturers such as Maruti Suzuki, Mahindra and Tata Motors have been exploring vehicle scrappage options, with an aim to develop it as a separate industry, thereby generating more employment opportunities.