Govt announces voluntary vehicle scrapping policy; to phase out old and unfit vehicles

The long-pending voluntary vehicle scrapping policy for phasing out of old vehicles, that had been in the works since 2016, was announced Monday by Union finance minister Nirmala Sitharaman in the Union Budget for financial year 2021-22.

The details of the policy will be declared within 15 days, Union transport minister Nitin Gadkari said on Monday.

The policy of scrapping old and unfit vehicles to reduce pollution and road congestion had been sent to the Cabinet Secretariat to be put up before the Cabinet for its approval in February 2020.

“We are separately announcing a voluntary vehicle scrapping policy to phase out old and unfit vehicles. This will help in encouraging fuel efficient, environment friendly vehicles, thereby reducing vehicular pollution and oil import bill. Vehicles would undergo fitness tests in automated fitness centres after 20 years in case of personal vehicles, and after 15 years in case of commercial vehicles,” Sitharaman said in her budget speech.

Gadkari said that the policy will lead to new investment of around Rs10,000 crore, and create as many as 50,000 jobs.

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The minister said the policy would cover an estimated 5.1 million light motor vehicles (LMV) that are above 20 years of age, while another 3.4 million LMVs are above 15 years. It would also cover 1.7 million medium and heavy motor vehicles, which are above 15 years, and currently without valid fitness certificates.

“This will boost automobile industry. Scrapping these vehicles will reduce population of old and defective vehicles, 25-30% reduction in vehicular air pollutants and improve road safety,” he said.

“These vehicles are estimated to cause 10-12 times more pollution than the latest vehicles. 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,” he said.

In its draft vehicle scrappage policy, the ministry of road transport and highways had stated that it will include a waiver in registration fee and reduced road tax by states for vehicles purchased against certificates for scrapping old vehicles in an environment friendly and scientific manner, HT had reported earlier this month.

The salient features of the draft policy include raising the registration fee for renewal after completion of 15 years; higher fee for issue of fitness certificate and fitness testing for vehicle above 15 years; restrictions by states on the entry of old vehicles in city limits and higher road tax on vehicles older than 15 years.

It also states that vehicle fitness will be undertaken through automated fitness centres from a notified date and deregistration of vehicles from VAHAN for vehicles older than 15 years (commercial vehicles) and 20 years(personal vehicles) found unfit through automated fitness testing centres.

According to officials aware of the development said the delay has also been caused due to duplication of clauses proposed in similar policies by other ministries like the steel ministry had to be removed for the policy to go through. The ministry of steel in 2019 had notified the Steel Scrap Recycling Policy to provide a framework to facilitate and promote the establishment of metal scrapping centres in India.

Reacting to the vehicle scrappage policy, All India Motor Transport Congress, the apex transporters’ body said in a statement, “First time in the history a scrapping policy related to the transport sector is announced by the Government in the Budget. It is just to legitimatise it, too is not going down well with the fraternity. It is unilateral, coercive and is to help automotive sector and OEMs. The final policy document is not shared with stakeholders or the affected parties or public or any comments and concerns invited for.”

“FADA is happy to note that the Hon’ble Finance Minister has finally announced the much awaited Scrappage Policy, though voluntary to phase out old vehicles. If we take 1990 as base year, there are approximately 37L Commercial Vehicles and 52Lakh Private Vehicles eligible for voluntarily scrappage. As an estimate, 10% of CV and 5% of PV may still be plying on road. We still need to see the fine prints to access the kind of incentives which will be on offer and thus have a positive effect on retail,” said Vinkesh Gulati, Federation of Automobile Dealers Associations (FADA).