The Government of India has announced a 5% incentive on the purchase of a new car for those buyers who choose to scrap their old cars under the scrappage policy. For the people not in know, the govt has announced the introduction of Vehicle Scrappage Policy during the 2021 budget session which aims to reduce air pollution by eliminating old vehicles from the road. The new scrappage policy will be effective from April 1, 2022.
Besides the announcement of the incentive, the Union Minister for Road Transport and Highways, Nitin Gadkari, also stated that the private vehicles older than 20 years and commercial vehicles older than 15 years will have to undergo fitness tests at automated fitness centres. If the vehicle fails the tests then it will not be allowed to run on roads and the owner will have to phase it out. It will also attract huge fines. And if the vehicle will be declared as fit, the owner will have to pay certain taxes, including green tax to use it on the roads. The green tax, on the other hand, will discourage people from using older polluting vehicles and prompt them to shift to less polluting new or electric vehicles. The amount of green tax will differ from the vehicle type.
The fitness examinations will be set-up under the public-private partnership (PPP) mode. The central government will assist private partners and state governments for scrapping centres.
As per the ministry, the scrappage policy could lead to a 30% increase in the Indian automobile industry’s turnover, from the present Rs 4.5 lakh crore to Rs 10 lakh crore in the coming years. Further, it will also help in boosting the sales of new vehicles in the country.