AIR Debate: Vehicle Scrappage Policy 

12th Aug 2021, Interview with Giridhar Aramane, Secretary, Ministry of Road Transport and Highways.

GOVERNANCE/ ECONOMY

• GS-2: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
• GS-3: Indian Economy & Challenges

AIR Debate: Vehicle Scrappage Policy 

• Old and unfit vehicles pollute air 10-12 times more compared to vehicles that are fit, and also pose a risk for road safety. 
• For a cleaner environment and safety of pedestrian and rider, ministry of road and transport and highways has launched the Voluntary Vehicle-Fleet Modernization Program (VVMP), also known as the Vehicle Scrapping Policy which is aimed at creating an ecosystem and for phasing out unfit and polluting vehicle.

What is Vehicle Scrapping Policy 

• VVMP is a transformative step to introduce a regime of fitter automobiles on Indian roads. The policy is a perfect blend of incentives and disincentives, directly making the roads safer and air cleaner. 
• it is a multidimensional policy with a positive impact on economy, employment, environment, and India’s commitment to Sustainable Development Goals.
• Voluntary Vehicle-Fleet Modernization Program (VVMP) is aimed at creating an eco-system for phasing out of unfit and polluting vehicles
• As per the policy, every private and commercial vehicle will undergo a fitness test after its initial registration period of 15 years and 10 years, respectively. The vehicle needs to clear the fitness test to continue playing on roads. Failing which, the vehicle has to be scrapped.

Why is the policy needed?

• Reduce pollution by scrapping ~1 Cr vehicles without valid fitness and registration and Improve Road, passenger and vehicular safety.
• Improve fuel efficiency and reduce maintenance cost for vehicle owners.
• Formalize the currently informal vehicle scrappage industry 
• Boost availability of low-cost raw materials for automotive, steel and electronics industry.

• This policy also helps reduce the dependency on raw materials import, which in turn reduces the cost of manufacturing. It will help brands to price their products aggressively.
  

Benefits for auto sectors:

• The policy is expected to boost the automobile sector by pushing for buying of new vehicles by phasing out older vehicles. 
• It is estimated that automobile industry in India will see a jump in turnover to ₹10 lakh crore from ₹4.5 lakh crore.

Vehicle Scrappage Policy Incentives & Benefits:

• Owners scrapping their old vehicle and plans for a new vehicle purchase will be offered incentives from the government. 
• Incentives will range between 4% and 6% cost of the ex-showroom price of the old vehicle.
• The policy also provides incentives to old vehicle owners to encourage the purchase of new vehicles, which will also help automotive sales and the overall economic growth of the country.
• Additionally, they will receive a rebate of up to 25 per cent of road tax upon purchase of a new vehicle. In the case of commercial vehicles, the road tax rebate will be 15 per cent.
• Also, vehicle manufacturers have been advised to provide a 5 per cent discount on new vehicle purchases to customers produce a scrapping certificate and a waiver on the registration fee.
  

Can you answer this question?

How significant will the implementation of Vehicle Scrappage Policy be towards reducing pollution?