India’s transport minister Nitin Gadkari, on Thursday, announced the vehicle scrappage policy in the Lok Sabha – the lower house of the parliament. Talking about the policy, the minister said that it is very important for the development of India’s economy as well as the environment.

Gadkari announces possible benefits of the vehicle scrappage policy

The minister listed out a long list of possible benefits of the policy in the parliament today. “I have told the automobile industry that people who come to buy new vehicles with a scrapping certificate, should be given a 5% discount/incentive. It’s not mandatory, but an advisory from us,” he said.

With the scrapping policy, raw materials like plastic, aluminium, steel,copper, would be recycled and will become a lesser cost component for the automotive industry. “Scrap material will create a lot of value addition,” he said.

Gadkari also said that states can also make registration fees and road tax lower, as then people will be encouraged to buy new vehicles which will also result in more sales for the automobile industry.

“Today automobile industry’s annual turnover is ₹4.5 lakh crore. With the scrappage policy, in five years that number can become ₹10 lakh crore. In turn, With the increase in sales, state and centre will also benefit from the GST revenue,” he said.

He said that currently there are 51 lakh vehicles older than 20 years, 34 lakh vehicles older than 15 years and about 17 lakh vehicles older than 15 years.

The policy will also create 3.7 crore jobs in the automobile industry as the minister hopes every district will have at least two-three driving schools and fitness centres, which will also increase employment.

What is vehicle scrappage policy?

In July 2019, the Central government had proposed amendments to the motor vehicle rules to allow scrapping of vehicles older than 15 years. The scrappage policy is meant to flush out old cars running on the roads and aim at phasing-out these old vehicles, which end up polluting the environment.

Finance Minister Nirmala Sitharaman had announced in Budget 2021 that cars older than 20 years and commercial vehicles older than 15 years will have to be scrapped. The government had also proposed renewing fitness certificates for vehicles older than 15 years every six months instead of the current one year.

With the same, automobile fitness centres would be set up across the country to check the health of vehicles and also handout certificates for scrapping.