Finance Minister of India Nirmala Sitharaman has announced the Voluntary scrapping policy while giving her Budget 2021 speech. The scrapping scheme will be based on the mandatory fitness test of vehicles which will undergo fitness test in automated fitness centres. The timeline fixed for fitness test is 20 years for personal vehicles and 15 years for the commercial vehicles.
In the Voluntary vehicle scrapping policy, old and unfit vehicles will be phased out. In July last year, the Centre had proposed amendments to the motor vehicle rules to allow scrapping of vehicles older than 15 years. Further, in a draft notification, the government proposed renewal of fitness certificates for vehicles older than 15 years every six months instead of the current one year.
The policy is expected to encourage customers to go in for new purchases which will be backed up by government incentives in lieu of their old vehicles. Significantly, this move is considered to be the most vital element of any further package to prop-up the sector’s growth.
Federation of Automobile Dealers Associations (FADA), apex national body of Automobile Retail Industry in India, ahead of the Budget session recommended an attractive incentive scheme for successful implementation of Vehicle Scrappage Policy across the country.
FADA said – The government must design a robust Inspection & Certification (I & C) policy or End of Life Vehicles (ELV) policy for vehicles in the country. However, as both the above policies would take time to be effectively implemented, there is a need for an immediate scheme based on incentive for encouraging voluntary scrapping of old vehicles and replacing them with newer ones. The new vehicles are cleaner and meet stringent emission requirements.
More details to be available soon.