What is Vehicle Scrappage policy?

1.What is Vehicle Scrappage Policy?

It is a policy which the Minister of Road Transport and Highways of India Nitin Gadkari made it mandatory for four-wheelers to Re-Registered their Vehicles after 15 years for commercial vehicles and after 20 years for private vehicles.

2.How this policy works?

The criteria for a Vehicle to be scrapped is primarily based on the fitness of vehicles through Automated Fitness Centres(AFC'S)

For private Vehicles, every vehicle should be registered after 15 years, and for commercial vehicles, Vehicles should be registered after 20 years and should first passing through a fitness test. If the fitness test clears, the holder of the vehicle gets a Registration certificate. 

In case of failure to get a fitness certificate, it will be De-registered after 15 years. Private Vehicles will be De-registered after 20 years if it is found unfit.

A penalty would be charged with Rs 300-500 per month who don't have registration certificates of vehicles, and for commercial vehicles penalty of Rs 50 would be charged daily.

3.Good incentives over National Vehicle Scrappage Certificate.

(a). Benefits over Scrapping Certificate

For those who have a Scrappage Certificate, a potential discount of 15% is likely to be offered by Automobiles companies(funds will be given by state government / central government to the automobiles companies).

The Registration fee may also be waived for the purchase of a new Vehicle against the Scrapping Certificate.

(b). Availability of low-cost raw materials 

It will boost the availability of low-cost Raw materials like copper, aluminum, steel, rubber, plastic to the automobiles industry. The elements from the Scrapped Vehicle can be extracted out and make recycling, and fit for new Vehicles.

(c). Rebate in Road Tax 

The state government will offer a road tax rebate of up to 25% for personal vehicles and 15% for commercial vehicles. In this way, people take advantage of this policy.

(d). Relaxation over Scrapping Certificate

Potential holders of the Scrappage certificate can get 4-6% of the value against Scrapped Vehicle.

(e). Increase in GST(Goods and Service Tax)

This policy helps increase GST by about 30000-40000 crore, as said by Nitin Gadkari on Friday. Due to the increase in the registration fee( 8 times for personal Vehicles and 20 times for Commercial Vehicles), people will start to buy new Vehicles instead of registered their Vehicles. This will increase the Demand for new Vehicles that will directly push to GST.

4.Motive of the policy

(a). Reduce pollution

Old Vehicle produces a larger amount of pollutants or particulates in the air than new vehicles. This policy helps to reduce pollution and make our country Wealthy and Healthy.

(b). Reduce the number of old and defective Vehicles

The main objective is to reduce the population of old and defective vehicles, which need huge fuel efficiency and release harmful gases.

(c). Decreases in fuel efficiency

A new vehicle can obtain energy from fuel and needs less fuel than an older vehicle. This will mainly decrease fuel efficiency. Switching to Vehicle scrappage Policy will reduce the import of Rs 8 lakh crore.

(d). Boost to the employment sector

National Vehicle Scrappage Policy helps 3.7 crore people directly or indirectly employed in the Automobile sector. Due to the spring up of Automated fitness centers in many parts of the country, 35000 people may get direct employment.

(e). Helps for researching electric vehicle

The elements extracted from the scrapped vehicles can be directly used in researching battery vehicles. For instance, a magnet name NdFeB, a rare earth element extracted from NEODYMIUM, can be used in an electric vehicle without importing this magnetic element. This policy makes it cost-effective.