Vehicle scrappage policy likely to be announced this week

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Union Minister for MSME and Road Transport & Highways, Nitin Gadkari on Monday approved the vehicle scrappage policy announced in the Union Budget and said that the voluntary policy will be unveiled in the next 4-5 days.

According to reports, rules for setting up scrappage centres will be announced first and fitness rules for vehicles will be announced in the second phase.

Union Finance Minister Nirmala Sitharaman had announced the policy in her Budget speech on February 1 to boost the sales of new vehicles.

A vehicle scrappage policy is a programme that helps the replacement of old vehicles with new ones. It encourages vehicle owners to scrap vehicles older than 15 years and purchase new ones instead.

In order to facilitate this, the government offers financial or tax-based benefits to consumers on the purchase of new vehicles. Another major advantage of such a scrappage policy is that it helps reduce air pollution by removing older and more polluting vehicles from the roads.

Gadkari, in February, had said that the policy would cover over 1 crore light, medium and heavy motor vehicles. “The policy would cover an estimated 51 lakh light motor vehicles (LMVs) that are above 20 years of age, while another 34 lakh LMVs are above 15 years. It would also cover 17 lakh medium and heavy motor vehicles, which are above 15 years, and currently without valid fitness certificates”.

Outlining the benefits of the policy, Gadkari had said that 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.

The automobile sector, especially the manufacturers were struggling even before the COVID-19 pandemic struck. The COVID induced lockdown worsened the situation and witnessed the auto companies record zero sales for the first time in history.

However, this policy can boost the sales of automobiles as vehicle owners will be encouraged to do away with their old vehicles and instead buy new ones.

On July 26, 2019, the government had proposed amendments to motor vehicle norms to allow scrapping of vehicles older than 15 years in a bid to spur adoption of electrical vehicles.

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