Vehicle scrappage policy awaiting final clearance from Cabinet, says FM

A policy for scrapping of old vehicles "is in the works" and will be announced after concerned ministries "fine tune" it, Finance Minister Nirmala Sitharaman said on Saturday. The much-awaited vehicle scrappage policy is awaiting final clearance from the Union Cabinet and would focus on eliminating the fleet of old polluting commercial vehicles plying on the country's roads.

"Scrappage policy is in the works ... I would wait for the concerned ministries also to fine tune everything and tie up the loose ends and then come to a stage where it can be announced by the ministry," Sitharaman said in an interaction with the media after presenting Budget 2020-21.

"So many things depend on how far they are mature and right for me to use it in the budget, but that does not mean because I've not announced it in the budget no work is going on in that area," she added.

The proposed policy, once approved, will be applicable on all vehicles including two- and three-wheelers. Earlier, the policy was sent for a fresh round of consultation with stakeholders on the direction of the PMO.

Road Transport and Highways Minister Nitin Gadakri had earlier said that once the policy is approved, India could emerge as a hub for automobile manufacturing as key raw material available from scrapping like steel, aluminium and plastic are bound to be recycled, bringing down automobile prices by "20-30 per cent".

The government on July 26, 2019 had proposed amendments to motor vehicle norms to allow scrapping of vehicles older than 15 years in a bid to spur adoption of electrical vehicles. In a draft notification, the government proposed renewal of fitness certificates for vehicles older than 15 years every six months instead of the current time-frame of one year.

The notification also provided that the newly purchased motor vehicles will be exempted for payment of fees for registration certificate and assignment of new registration mark, if the purchaser produces scrapping certificate of the previously-owned vehicle of the same category issued by the authorised scrapping centre/agency.

In May 2016, the government had floated a draft Voluntary Vehicle Fleet Modernisation Programme (V-VMP) that proposed to take 28 million decade-old vehicles off the road.

A committee of secretaries (CoS) recommended to the ministry redesigning of the scheme for greater participation of states with partial support from the Centre.

The CoS had suggested that the scheme may dovetail a calibrated and phased regulatory approach for capping the life of vehicles together with stricter implementation of emission norms and accordingly a revised consultation paper got in-principle nod of the PMO.