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New Vehicle Scrappage Policy: The CV Perspective

The demands for a comprehensive agenda for establishing the vehicle scrapping policy in India has been long talked about and discussed. However, the recent announcement made by the Honourable Ministry of Road Transport and Highways in this respect in the Parliament has welcomed the fresh wave of speculations and debates in recent days. Speaking from the forum of the Lok Sabha, Nitin Gadkari announced the unveiling of the sophisticated policy of vehicle scrappage which aims to address the problem of old and ageing vehicles running on Indian roads. Touting the policy as ‘win-win’, the Minister expressed his concerns relating to the amount of environmental damage which is caused as a result of the emissions from the old vehicles. Further, he expressed his willingness to make India a hub for the automobile industry with the transformative role which the draft policy is set to play in reducing the cost of manufacturing for different types and kinds of vehicles. He also enumerated the reasons to celebrate the draft policy when they seek to ‘incentivise’ the vehicle owners to get rid of their old vehicles in favour of the new ones.

The announcement in this respect was made last Thursday, i.e. on March 18, 2021, which seeks to phase out the implementation plan for the policy beginning from the date of April 1, 2023, with a mandatory requirement for vehicles over the age of 15 and 20 ( for commercial and private) to undertake the fitness test. Upon the successful passing of the test, the vehicle owners will have to additionally pay Green tax to allow such vehicles to run on roads for the period of 5 years, after which they would be again required to undertake the fitness test for their vehicles.

Further, as per the provision of the policy, in the given absence of the fitness certificates after the expiry of the set vehicle age, the registration of the vehicles will be cancelled automatically. Followed by this, the vehicle owners can scrap their vehicles from the scrappage centres countrywide, which will be established specially to serve the cause.

Incentive – What is in it For You?

Here are some of the manners in which the government aims to incentivise the vehicle owners to purchase a new vehicle in favour of the older ones as discussed by the Minister:

  1. The Ministry of Road Transport and Highways is planning to announce some relief from GST on the purchase of new vehicles for the vehicle owners scrapping their old vehicles.
  2. The advisory will be issued urging a 5% discount to be provided from the end of the vehicle manufacturers for those purchasing new vehicles after having scrapped their older ones.
  3. Further, the advice of providing a discount on the road tax to stimulate the purchase of new vehicles was also laid out at the parliament.
  4. The plans for the fee waiver of the registration fees have also been discussed to incentivise the vehicle owners scrapping their old vehicles to buy new vehicles.

Challenges for Commercial Vehicle Owners 

Talking on the merits of the policy initiative, the imperatives of the policy seeks to address the issues of road safety and pollution by compelling the retirement of commercial vehicles after the set period of 15 years. However, from the viewpoint of the commercial vehicle owners and transporters who hail their livelihood by running a large number of commercial vehicles, the policy initiative is ill-timed given the range of setbacks which they have already faced as a consequence of the pandemic. Further, the policy makes no mention of the much needed tradable certificates in exchange for which the vehicle owners can purchase second-hand vehicles in lieu of their scrapped vehicle. Hence the policy initiative will present a range of hefty challenges for the small fleet owners and transporters who may find it hard to suffice the expenditure of purchasing new vehicles.

Thus the long-awaited vehicle scrappage policy may seem like the steps taken in just the right direction with the enunciation of cleaner mobility, employment generation and revitalisation of the automobile sector of the country. The failure to account for providing any substantial relief or support to the commercial vehicle owners and transporters may, however, present the range of challenges when the policy initiative is solely motivated by the need of parting away with the practice of running ageing vehicles.

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