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Recently, auto majors have welcomed the new vehicle scrappage policy, highlighting that it would encourage people to replace old vehicles and will also boost the automobile sector.
About the Policy
- It was proposed in the Budget 2021- 22.
- It will be implemented in a phased manner by the Ministry of Road Transport and Highways.
- Criteria
- Vehicles will undergo a fitness test in automated fitness centres after 20 years in the case of personal vehicles and after 15 years in the case of commercial vehicles.
- All government vehicles and those owned by Public Sector Undertakings (PSUs) will be de-registered after 15 years.
- Any vehicle that fails the fitness test or does not manage the renewal of its registration certificate may be declared as an End of Life Vehicle.
- Timeline
- The policy will start for government vehicles from 1st April 2022.
- Mandatory fitness testing for heavy commercial vehicles will start from 1st April 2023.
- All other categories of vehicles, including personal vehicles, will start in phases from 1st June 2024.
- Incentives
- Advisories to States to give up to 25% rebate in road tax for personal vehicles and up to 15% rebate for commercial vehicles.
- The government will also offer a waiver of registration fees on the purchase of new vehicles.
- Advisory to automakers to offer the incentive of a 5% rebate for those who buy a new vehicle after producing a scrapping certificate.
- Disincentive
- Increased re-registration fees would be applicable for vehicles 15 years or older from the initial date of registration.
- Registered Vehicle Scrapping Facility (RVSF)
- The Ministry has issued rules for the registration procedure, powers, and the scrapping procedure to be followed by RVSFs.
- These RVSFs shall be provided access to the VAHAN database (government’s online vehicle register) and shall be authorized to make entries regarding scrapping of the vehicle & issuance of Scrapping Certificate.
(Image Courtesy: TOI)
(Image Courtesy: HT)
Benefits
- Reduction of Vehicular Pollution: The policy will encourage fuel-efficient, environment-friendly vehicles thereby reducing vehicular pollution. It will also help in phasing out old and unfit vehicles while bolstering road safety.
- Increase in Revenues: It will reduce oil import bills and increase the government’s revenue collection from the sale of new vehicles.
- The automobile industry in India will see a jump in turnover to Rs. 10 lakh crore from Rs. 4.5 lakh crore.
- Revival of Commercial Vehicle Segment: The move will revive the ailing commercial vehicle segment, which has not fully recovered from the effects of the Covid-19 pandemic. It presents a huge business opportunity for Original Equipment Manufacturers (OEMs).
- Market for Recycled Materials: The policy will pave the way for the creation of an ecosystem of vehicular scrapping facilities and a market for recycled raw materials.
- Boost to Indian Automotive Industry: It would bring the Indian automotive industry on par with international standards, besides offering the much-needed reprieve for auto, steel and electronics industries that were in need of rescue after the pandemic.
- Pave Way for Electric Vehicles (EVs): Imposing a green cess and exempting environment-friendly vehicles will favour EVs.
Possible Concerns
- Timely inflow of funding.
- Insufficient RVSFs.
- Unsafe disposal of recyclable and non-recyclable materials.
Suggestions
- Safe disposal and material recovery should be the critical parameters of an effective policy.
- It must leverage opportunities to maximise emissions gains from replacement of end-of-life vehicles and recover material from the wasted clunkers for reuse and recycling.
- It should be strengthened further to include extended producer responsibility and making the rules legally binding.
- Vehicle scrappage infrastructure should be scaled up country-wide for safe disposal of waste and for material recovery for recycling like steel, aluminum and plastics.
Source: TH
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