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Vehicle scrapping policy: Consumers can get 5% rebate on buying new vehicle

Scrapping of old vehicles will lead to recycling of components used in manufacturing vehicles, increase their availability and bring down the cost, Gadkari said.

twitter-logoBusinessToday.In | March 18, 2021 | Updated 17:26 IST
Vehicle scrapping policy: Consumers can get 5% rebate on buying new vehicle
Gadkari said the vehicle scrappage policy will be "win-win" for everyone.

The Road Transport and Highways Ministry has issued an advisory to automakers to provide 5 per cent rebate for consumers buying a new vehicle after scrapping their old vehicle.

Speaking on the vehicle scrappage policy in the Lok Sabha, Gadkari said the policy will be "win-win" for everyone as shifting to new vehicles will improve fuel efficiency, reduce pollution and increase road safety.

Besides, the policy will help in increasing the turnover of country's automobile industry to Rs 10 lakh crore from Rs 4.5 lakh crore currently. Scrapping of old vehicles will also lead to recycling of components used in manufacturing vehicles, increase their availability and bring down the cost, Gadkari said.

In her Budget speech, Finance Minister Nirmala Sitharaman had announced that the government will come out with a vehicle scrappage policy, which has been in making for many years now.

Also read: Gadkari asks auto component manufacturers to increase localisation to 100%

Under the policy, commercial vehicles will have to undergo a fitness test after 15 years, while personal vehicles will have to do so after 20 years. A vehicle failing fitness test or failing to get a renewal of its registration certificate may be declared as 'End of Life Vehicle'.

The ministry has proposed that commercial vehicles be de-registered after 15 years in case of failure to get the fitness certificate. As a disincentive measure, increased fees for fitness certificate and fitness test may be applicable for commercial vehicles from 15th year from the date of initial registration, according to the minister.

Another proposal is that private vehicles be de-registered after 20 years if found unfit or in case of a failure in renewing the registration certificate.

There are about 51 lakh light motor vehicles in the country that are older than 20 years and 34 lakh light motor vehicles that are older than 15 years. Around 17 lakh medium and heavy commercial vehicles are older than 15 years without a valid fitness certificate, Gadkari said, adding that older vehicles pollute the environment 10 to 12 times more than fit vehicles.

Also read: Electric vehicles sales jump 142% in three years

The ministry will publish a draft notification for stakeholders' comments in the next few weeks. It will also promote setting up of Registered Vehicle Scrapping Facility (RVSF) and will encourage public and private participation in opening such centres.

Speaking to media on the policy, Gadkari said vehicle fitness centres can be opened in every district of the country. They can see an investment of about Rs 10,000 crore and have the potential to create about 35,000 direct jobs.

Overall, the policy will bring down cost of auto components and can increase India's exports. Besides, the increase in vehicle sales will also lead to the Centre and states mopping up more revenue from GST. Gadkari said he has requested Union Finance Minister and finance ministers of states to consider providing some tax concessions to consumers buying new vehicles after scrapping old vehicle.

Also read: Govt may upgrade eligibility criteria for automakers under PLI scheme

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