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Vehicle scrappage policy

Topics Covered: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Vehicle scrappage policy:


Context:

Finance and Corporate Affairs Minister Nirmala Sitharaman has called for expediting the implementation of the vehicle scrappage policy.

About the Vehicle Scrappage Policy:

  1. Old vehicles will have to pass a fitness test before re-registration and as per the policy government commercial vehicles more than 15 years old and private vehicles which are over 20 years old will be scrapped.
  2. As a disincentive, increased re-registration fees would be applicable for vehicles 15 years or older from the initial date registration.
  3. The state governments may be advised to offer a road-tax rebate of up to 25% for personal vehicles and up to 15% for commercial vehicles to provide incentive to owners of old vehicles to scrap old and unfit vehicles.

Issues with the new policy:

  1. Limited incentive and poor cost economics for trucks.
  2. Lack of addressable volumes for other segments.
  3. The potential benefit from scrapping a 15-year-old, entry-level small car will be ₹70,000, whereas its resale value is around ₹95,000. That makes scrapping unattractive.

Need of the hour:

With this background, for the scrappage policy to be seamlessly implemented, we should have a comprehensive plan in terms of removing ELV (End of life vehicles) from the road. Freight transporters need stronger financial support. However, that said, it is important to note that unless old fleet vehicles are off the road, the benefits of implementation of BSVI vehicles will not be fully leveraged.

 

Insta Curious: 

  1. Do you know about the International Ship Recycling Convention, also known as the Hong Kong Convention? Read Here
  2. Do you know about the Green Tax? Read here

 

InstaLinks:

Prelims Link:

  1. Key features of the policy.
  2. Applicability.
  3. Incentives.

Mains Link:

Discuss the issues associated with the policy.

Sources: the Hindu.