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To phase out old and unfit vehicles, Finance Minister Nirmala Sitharaman on Monday announced a voluntary vehicle scrapping policy.

“This 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 in the Budget.

The automotive industry has welcomed the move and said that the much-anticipated scrappage policy will give a boost to the automotive sector by generating demand for newer vehicles.

“This will curb environmental stress caused due to pollution in the long run and will also catapult the adoption of e-vehicles in the next 5 years. Increased focus on road infrastructure, research and development, and PLI among others will open floodgates for innovation leading to the increased capacity of both passenger and commercial vehicles,” said CarWale & BikeWale CEO Banwari Lal Sharma. 

Also, the vision of ‘Atma Nirbhar’ Bharat coupled with increased impetus on FDI will boost domestic manufacturing of automotive components in India. Allocation of funds on building rural and agricultural infrastructure will also trigger demand for automobiles in smaller and lesser connected markets, he added.

Experts in the sector said simplification of GST and the incentivisation of digital payments will ignite the sector through means of customer confidence, convenience, and fair practices.

The vehicle scrappage policy will direct old polluting vehicles to the scrapyard. As these vehicles have a low resale value, it can be sent to scrapyards and provide some monetary benefits to the owner. By getting rid of old polluting vehicles, owners help save the environment.

Ather Energy C-founder and CEO Tarun Mehta said the voluntary vehicle scrappage policy announced to phase out old and unfit vehicles will encourage the sales of new vehicles.

“It is good to see that the government is looking at addressing the concerns regarding GST inverted duty structure,” he added.

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