Automakers may offer incentives to customers for scrapping old vehicles

Govt proposes manufacturers should bear the burden of discounts to push new CVs

The government may pass on the onus to automakers of providing incentives to customers for giving up old cars and discounts on new ones.

In the draft Vehicle Scrapping Policy, the Ministry of Road Transport and Highways has proposed that automobile manufacturers should facilitate the collection of scrapped vehicles, supply new ones and provide discounts and benefits to customers on new cars in lieu of giving up older ones.

This is part of a five-part proposal for ensuring mandatory scrapping of 20-year-old commercial vehicles (CV) from April next year. According to the proposal, industry body the Society of Indian Automobile Manufacturers has assured support. Business Standard has reviewed a copy of the draft policy.

“It is expected that the OEMs (original equipment manufacturers) would come out with committed discounts for new vehicles against the vehicles scrapped through authorised scrapping centres,” said the proposal.

The Vehicle Scrappage Policy aims to drive older vehicles, which contribute more to pollution, off the road. To facilitate this, the government also proposes to increase the re-registration fees by 25 per cent across all categories of passenger and commercial vehicles.

To ensure vehicles are “road worthy”, the policy has also suggested a fitness certification exercise for cars older than 15 years. This has to be done every six months.

Currently, cars older than eight years undergo fitness tests annually. The ministry has also proposed a higher fee for issuance of a fitness certificate or renewal of vehicle registration to “disincentivise operation of older vehicles,” the policy said.

To make the identification and scrapping of older vehicles seamless, the ministry plans to strengthen and create a robust information technology (IT) infrastructure for the regional transport offices (RTOs).

“The IT system would be strengthened to provide for de-registration systems, linking of scrapping centres all over the country for tracking and monitoring the scrapping process for older vehicles, issuance of scrapping certificates and lining of relevant databases in the ecosystem to ensure integrity of the entire scrapping process,” said the draft policy paper.

These recycling and scrapping centres would be set up by the Ministry of Steel — both for public and private sector.

Nitin Gadkari, minister for road transport and highways, said last week the Cabinet will soon decide on the proposed policy for discarding old vehicles will be applicable to all automobiles, including two- and three-wheelers.