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Vehicle Scrappage Policy announced in Lok Sabha: Road Tax Rebate, Waiver on Registration Fee

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Union Minister Nitin Gadkari on Thursday announced the much-awaited vehicle scrappage policy in the lower house of the Parliament.

Speaking in Lok Sabha, the Minister emphasised that the new policy will keep old polluting vehicles from plying on road, while promoting newer vehicles to boost growth in the auto sector. The policy is likely to kick in later this year, he said.

We’re introducing Voluntary Vehicle Fleet Modernisation Program, which would scrap old vehicles & support people economically while buying new vehicles. Scrap centers, auto industry, components industry will be benefitted from this policy.”

~ Nitin Gadkari said while speaking on the policy in Lok Sabha

Gadkari further added, “We have issued an advisory to all vehicle manufacturers to offer 5 per cent discount while selling a new vehicle against a scrapping certificate.”

The Union Minister believes the upcoming vehicle scrappage policy to be a win-win proposal for the auto industry too as it will reduce cost of components. He said, scrapping old vehicles will also raise demands for newer vehicles, which will boost the auto sector. He also said that the move is going to help both Centre and states to garner more GST. Besides the Centre’s proposal, Gadkari said the states too can offer discount on registration and road tax on new vehicles against scrapping of an old vehicle.

As proposed by the FM Nirmala Sitharaman, during the budget speech, the new policy will make all personal vehicles to undergo fitness test after 20 years while commercial vehicles would require it after completion of 15 years.

These automated fitness tests will be set up as the government will assist private partners and state governments for scrapping centres. Vehicles that fail the automated tests will be penalized with massive fines and also be impounded.

“These centres may have adequate space for test-lane, IT servers, parking and free movement of vehicles. To avoid conflict of interest, operators of fitness centres shall only provide testing facility and shall not provide repair/sale of spare services. Appointment for fitness centres may be booked online and tests reports shall also be generated in an electronic mode,” he said.

The tentative timeline for application of the proposed Scrappage Policy is: 

  • Rules for Fitness Tests and Scrapping Centres: October 1, 2021
  • Scrapping Government and PSU vehicles above 15 years: April 1, 2022
  • Mandatory fitness testing for heavy commercial vehicles: April 1, 2023
  • Mandatory fitness testing (phased manner for other categories): June 1, 2024

The new policy is expected to give a 30% boost to the Indian auto industry, taking the turnover to ₹10 lakh crore in the years as compared to the current INR 4.5 lakh crore.

Gadkari earlier said, “Once the policy comes to practice, availability of scrapped material like steel, plastic, rubber, aluminium, etc. will be used in manufacturing of automobile parts which in turn will reduce their cost by 30-40 per cent.”

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