On March 18, 2021, the Union minister for Road Transport and Highways, Nitin Gadkari, announced a ‘voluntary’ vehicle scrappage policy to (1) mitigate vehicular pollution and (2) more than double the turnover of Indian automobile industry from the current Rs 4.5 lakh crore to Rs 10 lakh crore in a few years.
At present, there are 51 lakh vehicles older than 20 years, 34 lakh older than 15 years but less than 20 years, and 17 lakh less than 15 years’ old but without a renewed fitness certificate. The policy architecture is founded on two pillars (incentivise their scrapping and disincentivise hanging on to these).
The owner going for scrap will get 4-6% of the ex-showroom price of the new vehicle as compensation; 5% discount on purchase of the new vehicle; and rebate on road tax at 25% for personal vehicle (states levy this tax at 4%, so 25% rebate is 1%). The policy moots waiver of registration fee for new vehicle purchased on production of ‘scrap certificate’ issued against scrapped vehicle. As for disincentives for hanging on, it proposes hike in fee for renewal of registration (Rs 5,000 for a car less than 15 years’ old, up from Rs 600) and fitness certificate renewal fees, stiff penalties for delay in renewals and imposition of the so-called ‘green tax’ by states on such vehicles.
All personal vehicles will have to undergo mandatory automated fitness test after 20 years to ply on the roads (for commercial vehicles, the threshold is 15 years). If they don’t pass, those vehicles will be de-registered and impounded by transport authorities, pronouncing these as ‘end of life vehicles’.
Even as the extant law in majority of the states provides for re-registration of, say, a private car (run on petrol) for five years on completion of initial registration period of 15 years, the policy leaves the choice to the owner, of course, subject to the vehicle being fit to run (depending on the fitness, registration may be extended even beyond 20 years). Incentives/disincentives are only intended to galvanise him/her take a decision that strikes a balance between his/her special needs and environmental concerns. The policy will kick-off with notification of the rules (expected in October 2021).
Meanwhile, an order of the Supreme Court (2018) validating a National Green Tribunal (NGT) order that barred petrol vehicles older than 15 years from plying in the National Capital Region (NCR)—for diesel cars, the threshold is 10 years—has put a spanner in the works. It gives rise to four anomalies.
First, the order negates the extant law that provides for renewal of registration on completion of 15 years from the date of first registration and takes retrospective effect. For instance, a person who bought a car, say, on January 1, 2007, on the basis that she would be able to run it for 20 years (15 plus five), i.e. till January 1, 2027—in sync with the law of the land—will now have to junk it on January 1, 2022.
Second, it presumes that all cars automatically become unfit for plying after completing 15 years. Whether a vehicle is fit to run or otherwise, a lot depends on how well it is maintained, its timely upkeep; this needs to be tested instead of pronouncing it as unfit merely because it has reached a certain age.
Third, it leads to patent discrimination of vehicle owners in the NCR vis-à-vis those in other states. While the former have no option but to dump their cars on completion of 15 years (even when these are fit to run and meet pollution norms), the latter can continue to run their cars up to 20 years and even beyond.
Fourth, the order renders the ‘voluntary’ vehicle scrappage policy infructuous in so far as the NCR is concerned. When there is prohibition on running the car beyond 15 years, the very mention of the word ‘voluntary’ is laughable.
The government should take urgent steps to correct this anomaly. It may either approach the top court to relent; alternatively, it must bring about necessary amendments in the Motor Vehicles Act to reflect the policy intent, i.e. using fitness as the sole criterion irrespective of the vehicle’s age for determining whether it can be allowed to run or not.
The author is a policy analyst