Govt Announces Details Of Vehicle Scrapping Policy – Free PDF Download

What has happened?

• Union road transport and highways minister Nitin Gadkari on Thursday announced the much-awaited vehicle scrappage policy (draft) in Parliament.
• The policy will likely to increase India’s automobile industry turnover to ₹10 lakh crore from the current ₹4.5 lakh crore and create as many as 35,000 jobs, Gadkari said.
• The new policy will be a “win-win” policy that will help improve fuel efficiency and reduce pollution.

Fitness certificate

• In case of failure to get a fitness certificate, commercial vehicles will be de-registered after 15 years.
• Private vehicles will be de-registered after 20 years if found unfit or in case of a failure to renew registration certificates, the minister said.
• The criteria for a vehicle to be scrapped is primarily based on the fitness of vehicles through Automated Fitness Centres (AFCs) in case of commercial vehicles and non-renewal of Registration in case of private vehicles.
• “The Ministry shall promote setting up of AFCs on a public and private participation model by state government, private sector, automobile companies etc.,” he mentioned.

Heavy re-registration fee

• Every non-commercial vehicle, like a personal vehicle, gets a registration certificate valid for 15 years.
• After that, the car needs to undergo a fitness test, passing which, it gets re-registered for another five years.
• The draft notification says owners of vehicles which are 15 years old will have to shell out a hefty fee for re-registration.
• Now, the fee for that re-registration is proposed to be hiked around 8 times for personal vehicles, and around 20 times for commercial
• The thing to note, however, is that the existing fees set for re-registration are outdated and reflect an archaic policy environment.
• Through the new fees proposed, the continued use of old vehicles is being discouraged.
• The idea is that it would eventually be more economically sensible for a vehicle owner to scrap her 15-year-old car and buy a new one, as compared to using it for another five years.
• The new charges will kick in from October 2021.

Good incentive for scrapping the vehicle

• Under the new vehicle scrappage policy, owners of old vehicles will get strong incentives to scrap old and unfit vehicles.
• “We have issued an advisory to all vehicle manufacturers to offer 5% discount while selling a new vehicle against a scrapping certificate,” Gadkari said in Lok Sabha.
• “The scheme shall provide strong incentives to owners of old vehicles to scrap old and unfit vehicles through registered scrapping centres, which shall provide the owners with a scrapping certificate,” he said.
• The scrap value for the old vehicle given by the scrapping centre will be approximately 4-6% of ex-showroom price of a new vehicle.
• The state governments may be advised to offer a road tax rebate of up to 25% for personal vehicles and up to 15% for commercial vehicles.
• In addition, the registration fees may also be waived for purchase of new vehicle against the scrapping certificate.

Govt Vehicles

• All vehicles of the central government, state government, municipal corporations, Panchayats, State Transport Undertakings, Public Sector Undertakings (PSUs) and autonomous bodies with the Union and state governments,
• May be de-registered and scrapped after 15 years from the date of registration.

Objective

• “The objectives of the policy are to reduce the population of old and defective vehicles,
• Achieve a reduction in vehicular air pollutants to fulfill India’s climate commitments,
• Improve road and vehicular safety, achieve better fuel efficiency, formalize the currently informal vehicle scrapping industry, and Boost the availability of low-cost raw materials for automotive, steel and electronics industry.”

Impact

• As a direct consequence of the scrapping policy, the auto manufacturing will also get a boost, industry experts said.
• This policy will result in increase of about ₹40,000 crore in Goods and Services Tax (GST), Gadkari said on Thursday.

Concern

• It is not clear as to who will foot the bill for the sops and discounts enumerated in the policy.
• In Germany, for instance, the government spent $3.5 billion to fund the programme wherein car owners were incentivised with a $3,320 discount,
• If they traded in their car older than nine years for a new one.
• In the US, where the scrappage rate is 5.1%, the government compensates the car dealer for the $4,500 reduction in the car’s price,
• Provided the old car is less than 25 years old and the new car is less than $45,000.

Q) Which of the following features of the Constitution have been borrowed from the Government of India Act of 1935?

1. Office of Governor
2. Concurrent list
3. Emergency Provisions
4. Rule of law

1. 1 & 2
2. 1 & 3
3. 2 & 4
4. 3 & 4

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