Budget: Centre announces policy to scrap polluting vehicles, details to be out in 15 days

The Centre on Monday announced the much awaited voluntary vehicle scrapping policy to phase out older and polluting vehicles. Finance Minister Nirmala Sitharaman, while delivering her Budget speech, said personal vehicles will undergo a test in automated fitness centres after 20 years and commercial vehicles after 15 years.

Union Minister for MSME and Road Transport & Highways Nitin Gadkari later informed that details of the policy will be out within 15 days. In his post-budget interaction, Gadkari said that the scrappage policy will lead to new investment of around Rs 10,000 crores and create as many as 50,000 jobs.

The minister said the policy would cover an estimated 51 lakh light motor vehicles (LMV) 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.
These vehicles are estimated to cause 10-12 times more pollution than the latest vehicles.

Outlining the benefits of the policy, Gadkari said 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.

India's auto industry welcomed the announcement, but said they are waiting for finer details. The industry and the government are at loggerheads on who will offer incentives to consumers under the policy.

"I am glad that the scrappage policy has been acknowledged in the Budget and expect the policy to be announced very soon. Though details are not yet out, when the policy comes out, it should have full incentive for scrapping and not just disincentivize for not scrapping," said Pawan Goenka, Managing Director & CEO, Mahindra & Mahindra.

Vipin Sondhi, MD & CEO, Ashok Leyland Limited, said that the implementation of a voluntary scrappage policy is good for the environment and good for setting in motion a circular economy. Kenichi Ayukawa, President, SIAM, said that they await the details of the vehicle scrappage scheme and hope that fitness testing and certification take place much earlier and at frequent intervals to ensure safety, environment friendliness and fuel saving.

Daimler India (DICV) said an incentive based scrappage policy can accelerate the need for cleaner vehicles and will be more impactful for the environment. "Overall, the scrappage policy and infrastructure spends will trigger the demand for the MHCV segment,” he said.