Vehicle Scrappage Policy to be implemented from April 2022: State Govt approvals pending

The Indian Government is ready to implement a vehicle scrappage policy. The central government is awaiting approval from respective state governments to begin implementing from 2022.

By:January 26, 2021 11:09 AM
Budget 2021-22, Union Budget 2021

The Indian Government has been working on a vehicle scrapping policy for some time. It is being done to help remove old and unsafe vehicles which are still plying on Indian roads. In addition to curbing tailpipe emission causing air pollution by their engines and also reduce gross fuel consumption. Nitin Gadkari, minister of road transport and highways, has approved a new “Vehicle Scrappage Policy” to incentivise user to scrap old vehicles and buy new ones.

The ministry released a statement; “The Minister approved the policy of deregistration and scrapping of vehicles owned by Government department and PSU, which are above 15 years in age. It is to be notified and will come into effect from April 1 2022.”

The policy is to scrap vehicles which are over 15-years on the road. They are not only to include private vehicles but also vehicles owned by government departments and PSU. The Policy notification is expected to be announced soon before being implemented from April 1, 2022.

Back in July 2019, the Motor Vehicles Act was amended to include the scrappage policy. It was done to remove older vehicles from the road and encourage the uptake of modern safer and less polluting vehicles as well as electric vehicles.

Benefits of Vehicle Scrappage Policy

This would not only curb air pollution levels in India. But will in return help in posting demand for new vehicles thus helping the ailing automotive industry in India. Additionally, older vehicles with outdated safety features would be phased out allowing for more people to be travelling is safer modern vehicles. But more importantly, the Indian government is also trying to reduce its oil import bill. Pushing for the use of electric vehicles is believed to help in reducing the amount of oil India is importing.

The new Green Tax policy

Additionally, the Indian Government has also announced a new Green Tax policy. Vehicles over a set of years (depending on the vehicle) would be subject to a new “Green Tax” on vehicle registration renewal. Under the new Green Tax structure, transport vehicles older than 8 years could be charged at the rate of 10 to 25 % of road tax at the time of renewal of fitness certificate.

Personal vehicles will also be charged Green Tax at the time of renewal of Registration Certification after 15 years. While city buses and public transport vehicles would attract a lower rate of Green Tax; electric vehicles, full hybrid vehicles along with CNG, ethanol, LPG powered vehicles along with farm equipment would be exempt from the Green Tax entirely. The tax rate would differ between petrol and diesel-powered vehicles. The tax money collected is said to be used to monitor and tackle air pollution and emission control. However, like the scrappage policy, it is also awaiting approval from the state governments.

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