Vehicle Scrappage Policy: Meeting Demands of Automobile Industry

Vehicle Scrappage Policy: Meeting Demands of Automobile Industry

In this policy, a rebate of about 5% would be given to the buyers on buying new cars on scrapping of the old vehicles.

Major companies of the automobile sector supported the recently launched Vehicle scrappage Policy as it leads to encouraging people for replacing the old vehicles and helps in the boosting of the sector. It also creates a major opportunity for original electric manufactures (OEM) and also helps in the reduction of the pollution created by the vehicles.


What is Vehicle Scrappage Policy?

In this policy, a rebate of about 5% would be given to the buyers on buying new cars on scrapping of the old vehicles.


Process of Registration & Fitness Tests

The registration process has many points given below:

1. As per the central motor vehicles act of, 1989 the eligibility of determining vehicle fitness are some tests like emission tests, braking tests, safety tests related to the equipment, and many others.

2. Regulations for the fitness tests & vehicle scrappage would be applicable from October 1, 2021. The scrapping of the government & PSU vehicles that are older than 15 years would be applicable from 1 April 2022.

3. The fitness test for heavy commercial vehicles came into force from 1 April 2023, and the same will be in a phased manner for other vehicles from 1 June 2024.

4. There will be an increase in the fees for fitness certificates and the test will be applicable for the commercial vehicles 15 years onwards from the time of starting registration & in the situation of the failure of the fitness certificates. In this situation, the vehicles should get de-registered.

5. The applicability of the increased fees for re-registration will be for the private vehicles 1115 years onwards from the date of the first registration. Those vehicles should get de-registered 

  • After 20 years if found unfit or failed to get renew the registration or found unfit.
     
  • A vehicle that has failed to renew registration or fitness test would be declared ‘’end of life vehicle’’
     


Financial Benefits

1. The scrap value of the old vehicle would be given by the scrapping centre which is approximately 4 to 6% of the ex-showroom cost of the latest vehicle.

2. OEMs is advised to give a 5% discount on the buying of the new vehicle against the scrapping CERTIFICATE.

3. States governments would give a road tax rebate of 15% and 25% on personal and commercial vehicles respectively.

4. Registration fees would be not taken on the purchase of the new vehicle against the scrapping certificate.


Role of the Scrapping Centres

1. Encouraging the public as well as the private participants in the opening of the Registered Vehicle Scrapping Facility.

2. Encouraging the establishment of the Automated Fitness Centre on a PPP model by the help of state governments, the private sector, automobile companies.


Impact of the Policy

The vehicle scrappage policy of the central government can lead to drastic changes in various sectors:

1. Reduction of India’s oil imports bill by the improvement in fuel efficiency.

2. Helps in minimizing environmental pollution.

3. Increases the safety on roads as helps in the removal of old as well as defective vehicles.

4. Increase the availability of low-cost materials in OEMs like plastic, steel, aluminium, rubber, etc.

5. Instrumental in increasing the turnover of the automobile industry.


Future

The automobile sector in India has been going through various transformational changes frequently for over 2 to 3 years now. The vehicle scrappage policy has been in demand of the automobile giants for many years as it leads to drastic changes like increasing efficiency of the vehicles, reduction of the environmental pollution, etc. The main challenges regarding the implementation of the policy because there should be efficient infrastructural needs for scrapping vehicles. Financial assistance should be given to the automobile sector. The policy can take India so long in the automobile industry.


Edited By Team CLIQTAX

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