New Delhi: Towards phasing out of older, polluting vehicles, the Road Transport and Highways Ministry has proposed manifold increase in the renewal of registration fees of vehicles older than 15 years of age. The proposed hike will be implemented from July 2020, a senior government official said told Mint.

An inter-ministerial consultation of the transport ministry’s Voluntary Vehicle Scrappage Policy, the contours of which is yet to be made public, is currently under progress and will be soon sent to the Cabinet for its approval.

“The idea is to disincentivize use of old, pollution-making vehicles and the scrappage policy will address this issue," the official cited above said. Besides, the proposed policy seeks to incentivize setting up of vehicle scrapping centers in the city.

The proposed vehicle scrappage policy, which has been under works for some time is expected to boost sales of automobile manufacturers leading to higher production capacity utilization.

Among several provisions in the proposed policy, the government official cited above said that in case of private four-wheeler car, the re-registration fees may be hiked 25 times to 15,000 from 600. The re-registration fees for commercial four-wheeler vehicle will be 20,000 from 1,000 now. For medium commercial four wheeler vehicles, the proposed fee for renewal of registration will hiked to 40,000, from 1,500 now, the official said.

Besides, vehicles will be automatically deregistered if it is not re-registered after a period of 15 years.

CNBC Awaaz had first reported the development.

The development comes amid slowdown in the economy, which has also impacted automobile sales, among other factors. The passenger vehicle industry suffered its worst-ever monthly sales performance in August. Sales of domestic passenger vehicles plunged 31.6% to 196,524 units from a year earlier, according to data from the Society of Indian Automobile Manufacturers (SIAM).

Last month, the finance minister Nirmala Sitharaman announced several steps for the automobile sector, including mandating government agencies and departments to replace old vehicles, increasing depreciation on new vehicles for commercial fleet service providers, urging banks to make auto loans cheaper, and increase credit availability to non-bank lenders. The minister had said that a scrappage policy is also under works to arrest falling sales.

Several European countries had introduced scrappage policy at the time of the 2008 global recession to boost demand, by promoting replacement of older vehicles by newer ones.

In June, the Centre had proposed exemption of registration fees for buyers of vehicles, provided a scrapping certificate of a vehicle, belonging to the same category of the vehicle being purchased, is produced.

“It has been provided that the newly purchased motor vehicles shall be exempted for the payment of fees for the purpose of issue of registration certificate and assignment of new registration mark subject to condition that motor vehicle is presented for the registration along with the scrapping certificate of the previously owned vehicle of same category issued by the authorised scrapping centre/agency and the scrapping certificate not utilised for any other such cases in the past," the ministry had said.

Besides this, the ministry had proposed renewal of fitness certificates every six months instead of a year, for vehicles older than 15 years. If implemented, the move can discourage vehicle owners from using old cars.

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