Budget 2021: Indian car manufacturers hail new Scrappage Policy

New Delhi, Feb 01: Automotive manufacturer Tata Motors on Monday welcomed the new move by the Indian government with regards to the new vehicle scrappage policy.

Issuing a statement, Guenter Butschek, CEO & MD, Tata Motors said "Budget 2021 is a progressive statement of intent and action that aims to both stimulate and sustain growth following an unprecedented year. The significant increase in overall allocation towards capital expenditure has been complemented with comprehensive measures to catalyse multiple levers- focus on rural, infrastructure investment, impetus to manufacturing, social welfare, entrepreneurship and digital - to enable overall holistic development.

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For the automobile sector, which is a significant contributor to India's GDP, there are multiple welcome announcements including a voluntary vehicle scrapping policy to phase out old and unfit vehicles, augmenting public transport system in urban areas, continuing focus on adoption of cleaner fuels, and enhancing outlays for developing road infrastructure and expanding the Swachh Bharat Mission."

Finance Minister Nirmala Sitharaman on Monday announced the much-awaited voluntary vehicle scrapping policy to phase out old and polluting vehicles, and vehicles older than 15 years will be required to undergo fitness tests.

Presenting the Budget for 2021-22 in Parliament, Sitharaman said that under voluntary vehicle scrapping policy, personal vehicles would undergo fitness test after 20 years while commercial vehicles would require it after completion of 15 years.

"Vehicles would undergo fitness tests in automated fitness centres after 20 years in case of personal vehicles, and after 15 years in case of commercial vehicles. Details of the scheme will be separately shared by the ministry," the finance minister said.

This will help in encouraging fuel-efficient, environment friendly vehicles, thereby reducing vehicular pollution and oil import bill, she said.

Stating that the policy would cover over one crore light, medium and heavy motor vehicles, Road Transport, Highways and MSMEs Minister Nitin Gadkari said details of the Voluntary Scrappage Policy will be declared within 15 days.

Gadkari said the policy will lead to new investments of around Rs 10,000 crore and create as many as 50,000 jobs.

"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," Gadkari said.

These vehicles are estimated to cause 10-12 times more pollution than the latest vehicles, he said.