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Vehicle Scrappage Policy Draft Prepared by Road Ministry: Sources

Representational image. (Image: PTI)

Representational image. (Image: PTI)

A scrappage policy is a government-funded programme to promote the replacement of old vehicles with modern ones and is expected to help in the reduction of pollution by scrapping older vehicles as well as create jobs in the auto sector.

Road Ministry has prepared the draft for the complete scrappage policy for vehicles older than 15 years, as per sources to CNBC-TV18. As part of the draft note, the hike in registration fees for vehicles older than 15 years will increase to Rs 15,000 which is currently Rs 600. When it comes to re-registration for such vehicles, the fees will be hiked to Rs 40,000 from what currently is Rs 1,500. If the registration is not renewed once the 15-year period is up, the vehicle will be automatically de-registered. On top of this, states will be able to alter the road tax in order to make the operation of older vehicles less attractive.

As for the scrapping certificate, it will be transferrable and will also facilitate discounts on the purchase of new vehicles.

A scrappage policy is a government-funded programme to promote the replacement of old vehicles with modern ones. A vehicle scrappage programme is usually intended to stimulate the automotive industry as well as taking obsolete and more polluting vehicles off the road.

Several countries have vehicle scrappage programmes in place, many of which came up during the 2008 global economic recession to stimulate and uplift market demand in the manufacturing sector.

Programmes such as the 'Car Allowance Rebate System' in the United States, 'Vehicle Incentive Programme' in Canada, and others in several European countries are examples of these policies across the world.

The Indian government has long mulled a scrapping policy with an aim to curb vehicular pollution due to old commercial vehicles that contribute majorly towards deteriorating air quality.

In July, the Ministry of Road Transport and Highways proposed a draft policy that buyers would not have to pay a registration fee for their new vehicles if they provide valid scrapping issued by an “authorised scrapping agency”.

The policy is also expected to generate new business and job opportunities as new scrapping centres are set up across the country.

Indian auto giant Mahindra had announced a partnership with Metal Scrap Trade Corporation Ltd (MSTC) and has set up scrappage centres called Mahindra Accelo. This would be the first government authorised scrappage centre in the country.

However, the mandated scrapping of 'old vehicles' may upset those in the business of transportation as it would require thousands of old trucks and heavy vehicles to be scrapped and large investment on the part of transporters to replace them.