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In August 2019, finance minister Nirmala Sitharaman had said that a scrappage policy for automobiles is in works (ANI Photo)
In August 2019, finance minister Nirmala Sitharaman had said that a scrappage policy for automobiles is in works (ANI Photo)

Budget may unveil roadmap on scrapping old, polluting vehicles

The much-awaited vehicle scrappage policy, which aims to boost automobile demand by phasing out old, polluting vehicles, could find mention in the Union Budget 2021-22, a top government official said on Tuesday

New Delhi: The much-awaited vehicle scrappage policy, which aims to boost automobile demand by phasing out old, polluting vehicles, could find mention in the Union Budget 2021-22, a top government official said on Tuesday.

“The (vehicle scrappage) policy has been stuck at various levels over the last few years. The policy will benefit automobile makers. The final call will be taken by the Prime Minister’s Office and the finance ministry," the official said, requesting anonymity.

The proposed policy, which will be voluntary for consumers, has been in the works for more than four years. Its finalization has been delayed because of issues such as the inability of the government and original equipment manufacturers (OEMs) to agree on the incentive that will be provided to people who scrap their vehicles.

“People who are scrapping their vehicles will have to be given some compensation/incentive so that they come forward and scrap it and buy a new vehicle," a second government official said.

Finance minister Nirmala Sitharaman had in August 2019 spoken about the government’s plan for a scrappage policy. The proposed policy is seen as an attempt by the government to boost automobile sales, which has been hit by factors such as weak consumer demand amid an economic slowdown.

The road transport and highways ministry prepared in February 2020 a cabinet note for creating an ecosystem for voluntary and environment-friendly phasing out of unfit and old polluting vehicles.

In September, Mint reported that the proposed policy will only provide a broad framework as the government is yet to finalize the norms for setting up of vehicle scrapping centres. It also won’t offer any tax exemptions to the automakers and any incentive to a customer will have to be provided by the automakers themselves.

Commercial vehicles that are 15 years old and private vehicles that are 20 years old could be considered for scrapping by their owners, while also giving enough importance to the fitness of a vehicle.

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