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Scrappage Policy: In What Way will You Get Benefited?

Do you know over 34 lakh cars and over 17 lakhs of medium and heavy vehicles are over 15 years old?

What do old automotive vehicles do?

As they get old, pollutants and harmful gases emit more than 10-12 times more than well-maintained vehicles. During the Budget session 2021, Finance Minister Nirmala Sitharaman confirmed that a vehicle scrappage policy would be implemented soon.

Scrappage Policy

Recent Trends

On August 13, 2020, Indian Prime Minister Narendra Modi announced the launch of the Vehicle Scrappage Policy by making a note to take huge steps forward in India’s development.

He stated that the vehicle scrapping policy phaseouts polluting vehicles and promotes sustainable friendly transportation to better the environment. In addition, mobility modernization makes travel more accessible and helps in the developing economy of the country. In the 21st century, this policy is much needed for the hour for India to be congested-free, clean, and convenient to travel without environmental degradation. 

What is the motive behind the Scrappage Policy?

This policy eliminates vehicles that don’t have fitness certificates and promotes aims to minimize vehicular pollution, satisfy climate pledges, improves road safety anfuel economy, formalize the informal vehicle scrapping business, and reclaim low-cost material for the automotive, steel, and electronics industries.

According to automotive industry executives and analysts, India’s well-defined vehicle scrappage legislation can help build a separate industry with a $6 billion (Rs 43,000 crore) yearly economic opportunity.

The deadline for switching from BS-IV emission rules was initially set for March 31, 2020, with BS-VI standards set to take effect on April 1, 2020. After the deadline, all vehicle models sold in India will have to fulfill BS-VI criteria, with no BS-IV vehicles being sold or registered.

The BS-VI emission requirements to reduce sulphur content must be as low as ten parts per million (ppm) under the, which is five times lower than the current fuel quality of 50 ppm.

According to the supreme court’s order, only those vehicles whose details were placed on the government’s E-Vahan platform will be allowed to register.

The decision came as a relief to those who purchased BS-IV compliant vehicles before the lockdown began on March 25, 2020. The court’s most recent order, dated July 31, 2020, stated that no new automobiles would be registered until the dispute is resolved.

The Supreme Court allowed the registration of Bharat Stage (BS)-IV vehicles sold before the countrywide lockdown imposed in March 2020 due to a new coronavirus epidemic on August 13, 2020. (COVID-19).

Concerns

Manufacturers or factory dispatchers of medium and heavy-duty vehicles fell by over 41% year on year, according to the Society of Indian Automobile Manufacturers (SIAM). Sales of commercial vehicles declined by 22% during the same time period.

Commercial vehicle owners will find it challenging to get rid of older vehicles, and local service maintainers may also be affected as they routinely maintain older vehicles. In contrast, new vehicles are brought under OEM’s AMC. The trucking industry, among others, has been hit the worst by the country’s downturn during the pandemic situation.

Apart from driver shortages, production delays, and higher new vehicle prices, there are other areas where a trucker is suffering. Because of the country’s more incredible benefits, this approach is vital. Increases in registration fees for vehicles older than 15 years may discourage people from driving older, more polluting vehicles.

Fitness tests are required to verify the vehicle’s quality, whether it is still roadworthy, and how big the impact on environment will be?  A Vehicle will be declared fit or unfit after completing many tests such as brake tests, engine performance, and others.

After passing the fitness test, a vehicle must retake the test for every five years to stay on road. For the renewal of registration certificates after 15 years, a valid fitness certificate will be required. The renewal certificate for private fleets will be valid for 5 years.

Benefits

In a recent article in the Times of India stated that anyone who buys a new vehicle and swaps in their old one will receive government incentives. Following this, key industries such as real estate, infrastructure, mining, and others experienced a significant drop.

The Centre has announced benefits for people who scrap their outdated and inefficient vehicles.

  • Owners of such vehicles will receive a scrap value equal to 4% to 6% of the ex-showroom price of the new vehicle they will be purchasing. This policy will benefit all stakeholders involved.
  • There will be no registration fees for new autos purchased if the owner shows a certificate of deposit.
  • State governments will give tax rebates of up to 25%; manufacturers will offer a 5% discount on new automobiles with the showing of a scrapping certificate, and manufacturers will provide remission of the registration fee for new vehicles.
  • Vehicle manufacturers have been advised to offer a 5% discount to customers who purchase a new vehicle with a certificate of deposit.
  • Purchasing a new vehicle will help consumers save time and money by lowering maintenance costs.
 

Sushanthi is a Content Writer who wishes to be the voice of brands to project their innovative ideas and stories through her writing skills.

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