The BuyT Desk
We have been hearing about the scrappage policy for some time now. Much before the time, the first draft was announced in 2019. With Finance Minister’s announcement in the budget 2021-22, the scrappage policy is formal now. Now we have to wait for the fine prints, to figure out the carrots and the sticks.
What we know about the scrappage policy right now-
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Finance Minister announced a voluntary vehicle scrappage policy which included private vehicles, more than 20 years old and Commercial vehicles more than 15 years old will have to go for a fitness test.
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Driving vehicles without going for the fitness test or a vehicle failing the fitness test would attract penalties.
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There are many automated fitness test facilities proposed where fitness tests will be conducted.
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We might see a green tax and some amount of additional road tax post the fitness test.
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Customers could get incentive on their new purchases in the form of reduced road tax or registration tax.
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Road Transport and Highways Minister, Nitin Gadkari assured that the details of penalties and incentives would be announced very soon.
When the scrappage policy was announced, it was said that it is going to have three main benefits because of the shift from old and polluting vehicles-
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It will reduce pollution
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Scrappage policy would help in reducing oil import bills and
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Add employment, while setting up the scraping yard and recycling centres.
However, more evident and urgent issue it could address was a depressed car market. The industry which was struggling with low car sales from long before the corona pandemic hit it. The pandemic hit the market on various fronts, shutting the sector completely, for the first time in history. Carmakers hope that the new scrappage policy would bring back the footfall in their showrooms when consumers have to scrap their old cars. But, is it so simple and straight? Not till we get all the details on this policy.
The success of this upcoming scrappage policy would depend upon many factors-
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What are the barriers for an older vehicle, increase in fitness test fees and penalty if the car fails the fitness test?
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How transparent and corruption-proof the fitness test mechanism could be?
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How many automated fitness test centres can be set up by the government as promised?
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How are the scraping yards or recycling centres are being built, and how is the progress?
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Finally, what is the incentive Indian customers get when they let their dream cars, from blood, sweat and tears, go! Don’t forget that we are the country of recycling and the land of ‘kitna-deti-hai’. We will think a hundred times before spending on a new car when the old car is still running.
According to the Federation of Automobile Dealers Associations, scrappage policy would impact approx 52 lakh passenger and 37 lakh eligible commercial vehicles. This number looks huge and the scrappage policy very important. Let’s hope that the policy implementation is seamless and brings all the positive changes we are hoping for.
