Vehicle scrappage policy likely to be rolled out soon: Here is what to expect

Union Minister for MSME and Road Transport & Highways, Nitin Gadkari on Monday approved the vehicle scrappage policy announced in the Union Budget. The policy will be unveiled soon.

According to reports, rules for setting up scrappage centres will be announced first and fitness rules for vehicles will be announced in the second phase.

Union Finance Minister Nirmala Sitharaman had announced the policy in her Budget speech on February 1 to boost the sales of new vehicles.

A vehicle scrappage policy is a programme that helps the replacement of old vehicles with new ones.

Gadkari, in February, had said that the policy would cover over 1 crore light, medium and heavy motor vehicles. "The policy would cover an estimated 51 lakh light motor vehicles (LMVs) that are above 20 years of age, while another 34 lakh LMVs are above 15 years. It would also cover 17 lakh medium and heavy motor vehicles, which are above 15 years, and currently without valid fitness certificates".

On July 26, 2019, the government had proposed amendments to motor vehicle norms to allow scrapping of vehicles older than 15 years in a bid to spur adoption of electrical vehicles.

Here is what we can expect from the new scrappage policy:

• It encourages vehicle owners to scrap vehicles older than 15 years and purchase new ones instead.
• In order to facilitate this, the government offers financial or tax-based benefits to consumers on the purchase of new vehicles. 
• Another major advantage of such a scrappage policy is that it helps reduce air pollution by removing older and more polluting vehicles from the roads.
• The policy is aimed at creating demand stimulus in auto sector. The automobile sector, especially the manufacturers were struggling even before the COVID-19 pandemic struck.
• Newly purchased vehicles will be exempted for the payment of fees for a registration certificate and assignment of the new registration mark, only upon scrapping the old vehicle in the same category.
• It would lead to recycling of waste metal, improved safety, reduction in air pollution, reduction in oil imports due to greater fuel efficiency of current vehicles, and stimulate investment. 

 What it means for Auto Industry?

Scrapyards consists of shredders which will help recycle the almost redundant vehicle and in return help the environment from pollution. However, the real challenge is to define the set process and how to get rid of parts that cannot be used once again in an environment-friendly manner.

And keeping in mind that there are likewise questions relating to the benefits add up to be given to owners getting their old vehicles - how much, who will give and what rules to be followed, the conspicuous and multi-faceted advantages of the arrangement itself is sponsored by most.