Budget 2021 | Vehicle scrappage policy to have mix of penalties, financial incentives

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The Centre’s proposed scrapping policy is set to be a mix of penalties and financial incentives, sources told CNBC-TV18.

Among the considerations include waiving off registration charge on a new vehicle to incentivize scrapping, the sources said.

Moneycontrol could not independently verify the report.

“The Centre is likely to ask states to give a rebate on road tax; besides also asking original equipment manufacturers (OEMs) to give 1-2 percent discount for customers who have scrapped old vehicles,” the sources added.

For this, states will be allowed to use the green tax revenue to give a rebate on road tax.

Also Read | Explained: What the vehicle scrappage policy means for private car owners

Further, the government is likely to hike the cost of registration renewal for all vehicles.

Under the new scrappage policy, personal vehicles and commercial vehicles which fail fitness tests after 20 years and 15 years will not be allowed to ply. The government will also issue guidelines on setting up of scrapping centres and automated fitness centres for this purpose, it added.

Finance minister Nirmala Sitharaman announced in her Union Budget 2021 speech on February 1 that the government intended to go ahead with a “Vehicle Scrappage Policy”. The policy has been in discussion for some time now, and it’s been made clear that the government intends to test-drive the policy by making it a voluntary endeavour before making it mandatory.

The idea is to phase out cars and CVs older than 20 or 15 years, respectively, in a bid to reduce urban pollution levels and galvanise automotive sales, which continue to suffer during India’s post-COVID recovery phase. This means that PVs older than 20 years will have to undergo a fitness test to determine whether the vehicle in question is qualified to run on roads, or headed for the scrap heap.

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