The government is incentivising environmentally conscious methods of disposal of old cars.
Owners who toss their vehicle to the scrapyard will receive a 5% discount from the manufacturer of their new car.
The policy is not mandatory.
The scrappage policy first introduced in the 2021 Union Budget by Nirmala Sitharaman has a lot riding on it as Transport Minister Nitin Gadkari hopes it will be a gamechanger for the Indian automobile industry.
Pros of the Plan: Financial
Scrapped material derived from old auto parts like steel, plastic, rubber, aluminium etc could be repurposed and used in the manufacture of auto parts and accessories. This would lower production costs by 30-40%.
Vehicle demand is also expected to rise along with ancillary industries which rely on scrapped cars.
For an industry battered by the pandemic the plan seeks to revive demand. Currently the Indian auto industry has a turnover of Rs 4.5 lakh cr. It is envisioned to jump to Rs 10 lakh cr in the near future.
Pros of the Plan: Ecological
Pollution will also be tackled as newer models are much more eco friendly compared to the old cars now in the junkyard which is 10-12x more polluting.
The adoption of new technologies such as strong hybrids, electric vehicles and those running on alternate fuels like CNG, ethanol and LPG will help India’s carbon emission and climate change carbon footprint goals.
A proposed green tax will be exempted for the aforementioned vehicles while the old defaulters will be penalised.
The revenue from this will be reinvested in green initiatives. To be precise vehicles older than 8 years are covered in the tax.
Mandatory Fitness Certificate
Private use vehicles will have to undergo fitness checks after 20 years on the road, and commercial vehicles after 15.
The fitness and pollution tests will take place in automated facilities which the govt is working towards installing.
The tests will be covered under public private partnership wherein the govt will join hands with private enterprises and state govts.
If the car fails the test the owners will be penalised and the car could be impounded.