Home >Politics >Policy >Scrappage policy may put onus on auto cos to offer incentives

India’s forthcoming vehicle scrappage policy will offer no tax exemptions and any incentive will have to be provided by the automaker, said a government official.

The government has prepared a cabinet note on creating an ecosystem for voluntary and environment-friendly phasing out of unfit and old polluting vehicles, minister of state for roads V.K. Singh told the Rajya Sabha on Saturday.

The Union cabinet may approve the scrappage policy after the monsoon session of Parliament is over, said the official mentioned above.

“Incentives, if any, will have to be offered by OEMs (original equipment manufacturers)," the official said on condition of anonymity. Earlier, the Centre had urged states to give a rebate on road tax to vehicle buyers against the presentation of scrapping certificates.

Commercial vehicles that are 15 years old and private vehicles that are 20 years old could be considered for scrapping by their owners, the official said.

Obtaining a fitness certificate will also be important. “Fitness certificates from automated testing centres have to be obtained, without which vehicles will not be allowed to ply. If a vehicle fails the fitness test more than thrice, it might be subjected to mandatory scrapping, according to the proposed policy," the official said.

Moves to create a policy on vehicle scrappage have made little progress in the last four years because of concerns of revenue loss.

In August last year, Union finance minister Nirmala Sitharaman had said that a scrappage policy for automobiles is on the anvil to increase production and capacity utilization of vehicles, amid a broader slowdown in the economy.

Since then, there have been several meetings among the Prime Minister’s Office, the finance ministry, the transport ministry, and NITI Aayog.

The policy is in the final stages of approval and will be rolled out in a month, transport minister Nitin Gadkari had said earlier this month.

However, the policy may not be immediately implemented and may only provide a broad framework as the government is yet to finalize the norms for setting up of vehicle scrapping facilities. In October last year, the road ministry had issued draft guidelines to set up vehicle scrapping centres.

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