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Vehicle Scrapping Policy

  • 19 Mar 2021
  • 4 min read

Why in News

Recently, the Union Road and Transport Minister announced the Vehicle Scrapping Policy in the Lok Sabha.

  • It was first announced in the Union Budget for 2021-22.
  • The policy is estimated to cover 51 lakh Light Motor Vehicles (LMVs) that are above 20 years of age and another 34 lakh LMVs above 15 years of age.
  • India will also implement a Global Positioning System (GPS)-based toll collection system and do away with all toll booths within a year.

Key Points

  • Aim:
    • Reducing the population of old and defective vehicles, bringing down vehicular air pollutants, improving road and vehicular safety.
  • Provisions:
    • Fitness Test:
      • Old vehicles will have to pass a fitness test before re-registration and as per the policy government commercial vehicles more than 15 years old and private vehicles which are over 20 years old will be scrapped.
      • Old vehicles will be tested at the Automated Fitness Center and the fitness test of the vehicles will be conducted according to international standards.
        • Emission test, braking system, safety components will be tested and the vehicles which fail in the fitness test will be scraped.
        • The Ministry has also issued rules for registration procedure for scrapping facilities, their powers, and scrapping procedure to be followed.
    • Road Tax Rebate:
      • The state governments may be advised to offer a road-tax rebate of up to 25% for personal vehicles and up to 15% for commercial vehicles to provide incentive to owners of old vehicles to scrap old and unfit vehicles
    • Vehicle Discount:
      • Vehicle manufacturers will also give a discount of 5% to people who will produce the 'Scrapping Certificate' and registration fees will be waived off on the purchase of a new vehicle.
    • Disincentive:
      • As a disincentive, increased re-registration fees would be applicable for vehicles 15 years or older from the initial date registration.
  • Significance:
    • Creation of Scrap yards:
      • It will lead to creation for more scrap yards in the country and effective recovery of waste from old vehicles.
    • Employment:
      • In the new fitness centers, 35 thousand people will get employment and an investment of Rs 10,000 crores will be pumped in.
    • Improved Revenue:
      • This will boost sales of heavy and medium commercial vehicles that had been in the contraction zone as a result of economic slowdown triggered by the bankruptcy of IL&FS (Infrastructure Leasing & Financial Services) and Covid-19 pandemic.
      • The government treasury is expected to get around Rs 30,000 to 40,000 crores of money through Goods and Services Tax (GST) from this policy.
    • Reduction in Prices:
      • Prices of auto components would fall substantially with the recycling of metal and plastic parts.
      • As scrapped materials will get cheaper the production cost of the vehicle manufacturers will also reduce.
    • Reduce Pollution:
      • It will help improve fuel efficiency and reduce pollution.
        • As older vehicles pollute the environment 10 to 12 times more, and estimated that 17 lakh medium and heavy commercial vehicles are more than 15 years old.
  • Other Initiatives to Curb Vehicular Pollution:

Source:IE

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