Scrappage policy in India

Many industry experts believe that after the BS6, Scrappage policy will be the next big thing for the Indian automakers. Prakash Javadekar said, “the policy is ready, all of the stakeholders have given their inputs, we will soon roll out the new Scrappage policy.” Let’s take a look at what is this new Scrappage policy and is it going to affect both private commuters and the transportation sector.

Image Source: DNA India

What is Scrappage policy?

As we already know that the Indian transportation sector, as well as other people, are still using old vehicles. These old vehicles do nothing but burn oil in excess than it is generally required and contribute to the already bad situation of air pollution. This is why India’s the Ministry of Road Transport and Highways (MoRTH) has brought out a new policy to flush-out old vehicles from the road and allow space for new more efficient vehicles.

How much older vehicles are being targeted by the Scrappage policy

For the commercial & transportation sector if the vehicle is older than 15 years as well as for private commuters if the vehicle is more than 20 years old, then they will be considered under the new scrappage policy.

As per the latest reports, the vehicle owners will have around 15 to 20 years to drive their new car, bus, truck, or any other commute transportation.

However, the policy also demands vehicle owners to have a fitness certificate for their vehicles. This certificate will prove if your vehicle is safe for the drive on roads and highways. Unless your vehicle can pass the test without a massive tailpipe emission, the chances are it will not be on the road for long.

The policy also states that, if your vehicle fails the fitness test more than 3 times then it will be sent for scrapping without any further ado.

What the government is doing for vehicle owners

According to current reports, there are no tax exemptions or incentives for vehicle owners that will be offered by the government, and the resale cost will be taken care of by the original equipment manufacturer (OEM).

Although, the scrapping of the vehicle will be taken care of by the government on their dedicated centers. Other than this, the compensation will be provided by the manufacturers.

What are the benefits of this new policy?

Other than clearing the roads from old vehicles that are only polluting the environment. The new policy will also help Automakers by a minor rise in the demand. In addition to this, the nation’s dependence on steel and other metal imports will also reduce since the Scrapping policy takes care of that too by allowing industries to recycle old vehicles.

However, the vehicle owners do not seem to get any benefits from this new policy, if anything then they only will have to spend their money on new purchases.

What does it mean for the Transportation sector in India?

As old vehicles that have failed the fitness tests will be scrapped and will be removed from the roads. There will be a huge gap in the demand and supply for the transportation sector. In addition to this, the new bill is going to force the transportation sector into a financial pothole.

Although the banking sector said that banks are ready to provide financial aid for those with credible credit history, it still is going to affect the middle-class transportation companies. Guess, we will just have to see for ourselves if the government will provide any incentives as they should for the transportation industry.

Source:

https://auto.economictimes.indiatimes.com/news/policy/scrappage-policy-to-come-in-next-15-days-nitin-gadkari/74002797

https://auto.economictimes.indiatimes.com/news/industry/scrappage-policy-to-be-out-soon-will-take-gst-demand-to-fm-pm-javadekar/77928484

Image Source: DNA India