The Union transport minister Nithin Gadkari recently unveiled
the much-awaited vehicle scrappage policy. The policy was previously put forth by
the finance minister Nirmala Sitaraman in the Union Budget: 2021-22. The government believes that the policy will help
to boost the automobile sector, enabling it to recover from the pandemic impact.
Calling it a win-win situation for both industry and customers, Gadkari said the
policy will make India the world’s largest automobile hub in the next five years. The
policy is also expected to largely reduce air pollution and increase road
safety.
As per the policy, commercial vehicles which are older than 15 years and private vehicles which are older than 20 years will undergo fitness tests. If the vehicles fail to get the fitness certifications, they will be de-registered. The rules for the fitness tests are expected to be notified by October 1 this year.
Under the new policy, the OEMs are advised by the government
to provide a discount of 5% against the scrappage certificate on the purchase
of new vehicles. By improving the fuel efficiency of the vehicles, the
scrappage policy would help reduce the oil imports of the country. It also helps
to improve the availability of raw materials of the automobile industry like plastic,
steel, rubber, etc. by recycling the old vehicles.
As per the government, the policy will help the automobile increase
the turnover from the current Rs. 4.5 lakh crore to Rs. 10 lakh crore. This is expected
to widen the scope of the automobile sector and democratize the industry, providing
business opportunities to small and medium enterprises in the country.
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