National Automobile Scrappage Policy and Its Importance for Vehicle Owners in India- Technology News, Firstpost

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Since 2015, India’s national car scrapping policy was officially announced today, 13 August 2021. At an investor summit in Gandhinagar, Gujarat, Indian Prime Minister Narendra Modi announced a national vehicle scrapping policy in the presence of Nitin Gadkari. , Vijay Rupani, Minister of Transport and Highways and Prime Minister of Gujarat. During the presentation, Gadkari mentioned that the policy of vehicle scrapping is a step that India has committed to the Paris Agreement. which also aims to provide much-needed impetus to the country’s automotive industry.

Why is a vehicle scrapping policy needed?

Promoting clean mobility requires reducing the country’s fuel import bills, and reducing emissions is currently an urgent need. Gadkari mentioned how many vehicles on Indian roads contribute greatly to rising pollution levels as well as their tendency to be less fuel efficient at the end of their life cycle. He further pointed out that such vehicles are also inherently dangerous and can pose a threat to their passengers and other road users.

What does the vehicle scrapping policy suggest?

As part of its Voluntary Fleet Modernization Program (VVMP), the government plans to set up 450-500 automatic vehicle fitness testing stations across India on the basis of a public-private partnership (PPP) involving private companies and state governments. In addition, 60-70 vehicle scrapping centers will be built, of which Gadkari mentions that they are located no more than 150-200 kilometers from any place in India. A total of seven agencies – including six from Gujarat and one from Assam – have today signed a memorandum of understanding with the government on this project.

The scrapping policy leaves the choice of scrapping to the car owner, Gadkari says, automatic tests emphasize the condition of the vehicle and not the age of the vehicle. Private vehicles that are more than 20 years old must be subjected to fitness tests at an estimated cost of 300-400 rubles per test. Vehicles that pass the automatic tests will have to pay a “green tax”, as a result of which owners will pay an additional tax of 10-25% on the road tax at the time of renewal of the vehicle’s condition certificate, as well as re-registration fees. . However, those who choose to drive a car that has not passed the automatic test face significant penalties, and such vehicles can also be confiscated.

When will the vehicle scrapping policy come into force?

The implementation of vehicle scrapping policy in India is still some time. Initially, heavy duty vehicles will be subject to fitness testing from 1 April 2023, while fitness testing will be mandatory for all other vehicle types from 1 June 2024 in stages.

What are the benefits to the vehicle owner of scrapping a car?

Once the vehicle has been scrapped, the owner receives four to six percent of the price of the showroom for their old vehicle and a scrapping certificate, which entitles the person to a 25 percent tax deduction, registration fee, and 5 percent discount on the new vehicle showroom price offered by the car manufacturer. This basically makes a new vehicle cheaper for someone who has scrapped their old vehicle, and possible discounts are 30,000 rubles (for a car costing 6 million rubles) to 50,000 rubles (a car for 10 million rubles).

Automatic fitness tests must be carried out on private vehicles over the age of 20.  Photo: dreambase via Pixabay

Automatic fitness tests must be carried out on private vehicles over the age of 20. Photo: dreambase via Pixabay

Over time, the government estimates that scrapping an old vehicle and replacing it with a new one will bring significant financial benefits to motorists in addition to reducing emissions and improving fuel efficiency. Road and Highway Secretary Giridhar Aramane said preliminary estimates that the owner of an old compact sedan could reap the benefits of up to 1.15 million rubles over three years by scrapping his vehicle and buying a new one, including direct concessions and savings on lower fuel and maintenance costs.

What are the other positive aspects of vehicle scrapping policy?

The national car scrapping policy attracts more than 10,000 million rubles in investment and creates 50,000 jobs in the country. Gadkari explained that proper recycling of raw materials from scrapping will help reduce imports of materials such as aluminum, copper, steel and others. Raw material costs are estimated to fall by as much as 40 percent, as up to 99 percent of the materials used in a vehicle can be recycled. This makes the components cheaper for vehicle manufacturers and also increases GST revenues by 30,000 to 40,000 rubles for both the state and the central government.

In addition, there is an opportunity to obtain the materials needed for the local production of lithium-ion batteries (used in electric vehicles) by scrapping older vehicles, which could contribute to the growth of the EV business.

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