Union Budget 2021 | FM Nirmala Sitharaman announces voluntary scrapping policy to phase out old vehicles

In 2019, the govt had proposed amendments to motor vehicle norms to allow scrapping of vehicles older than 15 yrs in a bid to spur adoption of electrical vehicles

Finance Minister Nirmala Sitharaman on Monday announced in the Budget Voluntary Vehicle Scrappage Policy to phase out old and unfit vehicles.

“This (policy) will help in encouraging fuel-efficient, environment-friendly vehicles, thereby reducing vehicular pollution and oil import bill. Vehicles would undergo fitness tests in automated fitness centres after 20 years in case of personal vehicles and after 15 years in case of commercial vehicles,” she said.

Welcoming the announcement, Union Minister for Road Transport and Highways Nitin Gadkari said the details of the policy will be finalised in 15 days.

The scrappage policy will lead to a new investment of around Rs 10,000 crore and create as many as 50,000 jobs, he said.

The policy would cover an estimated 51 lakh light motor vehicles (LMV) that are above 20 years of age, while another 34 lakh LMVs are above 15 years old. It would also cover 17 lakh medium and heavy motor vehicles, which are above 15 years old and currently without valid fitness certificates, Gadkari said.

These old vehicles are estimated to cause 10-12 times more pollution than the latest vehicles, he said. Outlining the benefits of the policy, Gadkari said it would lead to recycling of waste metal, improved safety, reduction in air pollution, reduction in oil imports due to greater fuel efficiency of current vehicles and stimulate investment.

On July 26, 2019, the government had proposed amendments to motor vehicle norms to allow scrapping of vehicles older than 15 years in a bid to spur adoption of electrical vehicles.

Recycled material from old vehicles will help reduce the prices, adding that the automobile industry’s turnover, which is Rs 4.5 lakh crore with Rs 1.45 lakh crore exports, will get a boost, Gadkari said.

In May 2016, the government had floated a draft Voluntary Vehicle Fleet Modernisation Programme that proposed to take 28 million decade-old vehicles off the road.