Scrapping is the New Black!3 min read

Scrapping is the New Black!3 min read

“The measure of intelligence is the ability to change” – Albert Einstein. The world around us is constantly changing given the new age technology solutions. We have adapted to the changes almost instantly given the situation. Be it digital payments in times of demonetisation or replacing yellow bulbs with new LED lights.

Another such change that the government is compelling us to make is a shift from old vehicles to new ones by bringing in Voluntary Vehicle Scrappage Policy.
In the Union Budget 2021, the government announced a voluntary vehicle scrappage policy. Union finance minister Nirmala Sitharaman announced that personal vehicles older than 20 years and commercial ones older than 15 years will have to undergo fitness tests at testing centers under the voluntary vehicle-scrapping policy.

Fully automated fitness test facilities will be set up on a public-private partnership basis involving private firms and state governments. The automated tests will allow no scope for human intervention or fudging of results.

Those who choose to drive a vehicle that has failed the automated test will face substantial penalties and such vehicles could also be impounded.

The scrapping of old worn-out vehicles will not only be a boost to new technologies with better mileage of vehicles but will also promote green fuel and electricity and cut India’s Rs 10 lakh crore crude import bills.

It is believed that the implementation of the scrapping policy will give strength to the economy facing sluggishness and decline. While the finer details of the policy will be unveiled soon, the ministry exuded confidence that the automobile industry will lead to new investments of around Rs 10,000 crore and create as many as 50,000 jobs. Also, the government said that once the policy comes into practice availability of scrapped material like steel, plastic, rubber, aluminum, etc will be used in the manufacturing of automobile parts which in turn will reduce the manufacturing company’s cost by 30 to 40%. The automobile sector will gain momentum as the demand for new vehicles increases, and customers are likely to get new vehicles up to 30% cheaper.

Nitin Gadkari reportedly said that roughly one crore vehicles are likely to go for scrap as per the new policy. This policy also aids the pollution initiative taken by the government.

The policy would cover an estimated 51 lakh Light Motor Vehicles (LMVs) that are above 20 years of age, while another 34 lakh LMVs are above 15 years. It would also cover 17 lakh medium and heavy motor vehicles, which are above 15 years, and currently, without valid fitness certificates.

These vehicles are estimated to cause 10-12 times more pollution than newer vehicles.

Last month, the government said it plans to impose a green tax on older polluting vehicles soon in a bid to protect the environment and curb pollution, while vehicles like strong hybrids, electric vehicles, and those running on alternate fuels like CNG, ethanol, and LPG will be exempt. The revenue collected through the green tax will be utilised for tackling pollution.

Under the scheme, transport vehicles older than eight years could be charged a green tax at the time of renewal of a fitness certificate at the rate of 10% – 25% of road tax, as per the green tax proposal sent to states for consultations after it was cleared by the ministry.

What do you think about the scrappage policy? Will this provide the required push for the Indian Automobile Industry? Let us know in the comments.