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CSB IAS ACADEMY

NATIONAL VEHICLE SCRAPPAGE POLICY

 PM Modi launched the National Vehicle Scrapping Policy during the Investors
Summit held in Gandhi Nagar, Gujarat.
 PM Modi pointed out the new policy would help in phasing out the unfit and
polluting vehicles and at the same time help the economy grow.
 Finance Minister Nirmala Sitharaman announced the policy in her Febraury bud-

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get for Financial Year 2022 to phase out unfit, polluting vehicles.

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 The policy is an attempt by the goverment to boost automobile demand that has
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been hit by weak consumer sentiment amid a slow down in the broader economy.
What is vehicle Scrappage Policy?
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 The National Vehicle Scappage policy is an official declaration by the government
regarding the rules and regulations to be followed while scrapping a vehicle in
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India.
 As per National Vehicle scrappage policy old and unfit vehicles whose life cycle is
complete shall be scrapped.
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 This will be a voluntary process but defined by rules. For instance, vehicles that
are 15-20 years old need not be scrapped compulsorily.
 However, they will have to undergo a fitness test after a defined period. Failing
the test would most likely lead to vehicle scrappage.
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Why is the National Vehicle Scrappage Policy needed ?

 PM Modi had revealed that India has 51 Lakh light motor vehicles that are older
than 20 years and 34 lakh light motor vehicles that are older than 15 years. Around
17 lakh medium and heavy commercial vehicles are older than 15 years without
valid fitness certificates.
 In the interest of a clean environment and rider and pedestrian safety, the Minis-
try of Road and Transport and Highways came with the vehicle scrapping policy
which is aimed at creating an ecosystem for phasing out of unfit and polluting
vehicles.
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What does the policy aim to achieve?

 The idea is to phase out cars and commercial vehicles which are older than 20 or
15 years. This is being done in a bid to reduce urban pollution levels and galvanise
automotive sales. This means that any private vehicle that is older than 20 years
will have to undergo a fitness test.
How does the fitness test work?
 According to the new policy guidelines, a vehicle will have to undergo a fitness
test after the accepted 20 year period. While its possible for each car to pass the
fitness test and acquire a fitness certificate, each fitness test would cost approxi-
mately Rs.40,000. This is in addition to the road tax and possible ‘Greeen Tax’ that

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you have to pay while mandatorily renewing your private vehicle’s registration

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after the 15-year period.
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 Each fitness test certificate is applicable for 5 years, after which the owner of the
vehicle will be required to get another test, costing the same.

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 Along with this, there are other extra costs involved where the government has
proposed a ‘Green Tax’ which requires you to pay 10-25 percent of your road tax
everytime you renew your fitness certificate.
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What happens if the vehicle does not pass the test?
 According to the law, it is illegal to drive a car that has not passed a fitness test as
it is considered unregistered.
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 One cannot circumvent a fitness test while going through the mandatory re-regis-
tration porcess, and if the vehicle fails the test it is simply not registered making it
illegal to drive on road.
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 The policy will be in effect from April 1, 2022, would also offer a monetary incen-
tive to the owners sending their vehicles to the scrap heap, although if the vehicle
fails the test thrice, they wouldn’t be left with much of a choice.
Key Highlights of Vehicle Scrappage Policy:
 The owner of an old vehicle will receive the scrap value which is around 6% of the
ex-showroom price of the new vechile they buy.
 The scheme will provide incentives to the owners of the old vehicles to scrap their
unfit vehicles through registered scrapping centres.
 As per the policy automobile manufacturers will provide a discount of 5% on the
purchase of a new vehicle against the scrapping certificate.

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 The new vehicle policy proposes private vehicles to be de-registered after 2-years if
found unfit or if it fails to renew registration certificate.
Benefits of Vehicle Scrappage Policy:
 The benefits of the new vehicle scrappage policy will be for the economy, automo-
bile sector, vehicle owners and others.
 Scrapping unift vehicles will result in less air pollution and carbon emission and
provide better air quality.
 With old vehicles being scrapped, the demand for new vehicles will rise and the
old ones will need to be replaced by new ones.
 For the automobile sector, it will benefit the new vehicle scrappage policy leading
to more job opportunities and more sales.

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 New advanced vehicles will be comparitively safer. For example, new cars comes
with superior safety features.

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 The recycling industry will also be more active leading to higher revenue.
 Vehicle owners might receive tax benefits as an incentive to scrap an old vehicle.
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 Vehicle owners might also get the best price for car scrappage for workable parts
such as types.
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