Coming soon: A vehicle scrapping policy

ABOUT A crore old vehicles, currently in circulation, will go off the roads as the Centre on Monday announced a voluntary vehicle scrapping policy in the Budget.

Personal vehicles older than 20 years and commercial vehicles older than 15 years will have to undergo fitness tests in automated vehicle fitness testing centres. “This will help in encouraging fuel efficient, environment friendly vehicles, thereby reducing vehicular pollution and oil import bill,” Finance Minister Nirmala Sitharaman said.

Following the announcement, Road Transport and Highways Minister Nitin Gadkari said his ministry would be issuing the policy in the next 15 days.

“Riding on this policy, India will become the number one automobile manufacturer in the world in the next five years. We are fine-tuning some parts of the policy before rolling it out,” Gadkari told The Indian Express.

Gadkari said the Centre has made it clear that the scrapping of polluting, unfit vehicles would be mandatory in the phase-out ecosystem.

“Those who scrap their vehicles will surely buy new ones. That will boost demand, create around 35,000 jobs, and take the size of the automobile industry to around Rs 6 lakh crore from the current Rs 4.5 lakh crore,” he said, adding that this will also entail an additional investment of Rs 10,000 crore in the auto sector and setting up of the scrapping industry.

Sources said there may not be an “end-of-life” age bracket for vehicles as such but through a series of incentives and disincentives, the policy will make vehicle owners carry out fitness testing at automated fitness centres to be set up by states and also by private players.

The vehicles that fail the fitness test will be “grounded”, sources said.

Under the policy, anyone scrapping an old vehicle will get a certificate of scrapping and using that he might get a discount of up to 5 per cent while purchasing a new vehicle. There are also talks to make the certificate more useful in terms of availing a vehicle loan on easier terms for commercial vehicles.

Sources said the final shape of the policy is still at a discussion stage at the top offices of the government.

“New vehicles are more fuel efficient, which in turn will save on the country’s crude import bill. Besides, older vehicles pollute 10-12 times more than new vehicles. So this is a win-win policy,” Gadkari said.

As per the ministry’s data, around 51 lakh light motor vehicles in India are older than 20 years; 34 lakh are older than 15 years, while 17 lakh medium and heavy commercial vehicles are older than 15 years and without a valid fitness certificate.