Will your old vehicle be scrapped? 10 key points of the new policy explained

Vehicle scrappage policy explained

During the presentation of the Union Budget 2021-2022, Finance Minister Nirmala Sitharaman officially announced the vehicle scrappage policy in the country. Union Minister for Road Transport and Highways Nitin Gadkari has often shed light on the highlights of the policy that could change the face of the Indian automobile industry. Here are 10 key takeaways from the policy:

1) Private vehicles that are more than 20 years old and commercial vehicles that are more than 15 years old will have to undergo strict inspections under the policy.

2) The inspections will be carried out at centres that will be set up on a public-private partnership (PPP) basis. Fully automated tests will help avoid any interference and influence by officials. According to Gadkari, such tests will reduce the scope for corruption.

3) Even commercial vehicles older than eight years will have to undergo the tests and in case they fail to clear them, such vehicles will be subjected to a green tax. In such cases, owners will have to pay an additional 10% to 25% of road tax at the time of renewing the vehicle's fitness certificate.

4) The new policy will deal a big blow to owners of vintage vehicles. In Kerala itself, there are 2.25 lakh vintage vehicles. When vehicles that are more than 20 years undergo strict tests, vintage vehicles too would have to be subjected to the inspection. If the scrappage policy is made strict like foreign countries, vintage vehicles will not be able to hit the roads and would turn be to showpieces confined to garages.

Vehicle scrapping

5) According to the policy, if people opt for the voluntary scrappage scheme and have their old vehicle scrapped, they will be eligible for incentives when they buy a new vehicle.

6) Once the policy is implemented, people will be forced to buy new vehicles with better fuel efficiency and low pollution levels, thus helping reduce India's crude import bill by Rs 10 lakh crore.

7) According to Gadkari, around one crore old vehicles will have to be scrapped once the policy is implemented.

8) The Union minister said the new policy will give a Rs 10 lakh crore (30%) boost to the Indian automotive industry.

9) Besides, it will also generate up to 50,000 new jobs and attract investments worth Rs 10,000 crore in the country.

10) In Kerala itself, 35 lakh vehicles will have to be scrapped, according to the motor vehicles department figures. Two-wheelers will form about 70% of this figure.

Impact in Kerala

Once the policy is implemented, it is expected that Kerala will become the largest automotive market in the country. According to the motor vehicles department, 35 lakh vehicles will have to be scrapped in Kerala. Out of this, two-wheelers form about 70%.

At present, Kerala has one of the highest vehicle densities in the country at 425 vehicles per 1,000 population. The scrappage policy will come into force in April 2022. Vehicle sales see a yearly growth of 10.7% in Kerala. Among the vehicles, about 65% are two-wheelers. And hence, the policy will hit owners of two-wheelers the most. Old cars form 22%, autorickshaws and other commercials vehicles comprise 5% and buses 2%.


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