Vehicle scrappage policy
Why in news:
- The Union Budget for 202324 has laid special emphasis on vehicle scrapping policy by allocating adequate funds to replace vehicles that are over 15 years.
- The move has been hailed by the automobile manufacturers as it would provide a significant opportunity for fleet modernisation and reduce fossil fuel consumption.
- Finance Minister said that all vehicles owned by the Union and the State governments including buses owned by transport corporations and public sector undertakings that have been on the road for over 15 years will be scrapped.
Benefits of the move:
- Reduces pollution
- Helps in greening the economy
- Creates demand for new vehicles
- Helps to achieve sustainable development goals by 2030.
- Helps to become carbon neutral by 2030.
More about Vehicle Scrappage Policy:
- The Vehicle Scrappage Policy, launched on August 13, 2021, is a government-funded programme to replace old vehicles with modern & new vehicles on Indian roads.
- The policy is expected to reduce pollution, create job opportunities and boost demand for new vehicles.
- Several countries including the US, Germany, Canada and China have introduced vehicle scrappage policies to boost their respective automotive industries and curtail vehicular pollution.
- This policy also supports India’s ‘Green India’ mission, as it creates space for a cleaner fleet of vehicles.
- According to the new policy, commercial vehicles aged >15 years and passenger vehicles aged >20 years will have to be mandatorily scrapped if they do not pass the fitness and emission tests.
- The government has also planning to introduce “Green Tax” under which transport vehicles older than 8 years will be charged a Green Tax at the time of renewal of fitness certificate, at the rate of 10–25% of road tax.
- The Vehicle Scrappage Policy extends many obvious benefits, besides pollution control and improved road safety factor.
- The raw materials derived from scrapped vehicles such as copper, rubber, steel, aluminium and plastic can be reused in new vehicles, which can help reduce the price of new vehicles and subsequently, boost sales.
Some incentives for scrapping old vehicles and buying new ones are as follows:
- Manufacturers can give up to 5% discount for buying new vehicles
- Zero registration fee for new vehicle purchase
- Owners can receive scrap value equivalent of 4–6% of ex-showroom price of new vehicles
- States can give up to 25% and 15% rebate on road tax for personal and commercial vehicles, respectively
Syllabus: Prelims + Mains; GS3 – Pollution and related policies
