Budget 2021: Big decision on scrappage policy likely; know what is scrappage policy and how it benefits you

The Scrappage policy, if implemented would mean that old vehicles plying on the roads will be phased out.

New Delhi: In what could give a further boost to the automobile industry, the finance ministry may make announce Scrappage policy in the upcoming Union Budget, sources told Zee Media.

What is scrappage policy and how it benefits you

The Scrappage policy, if announced during the Union Budget 2021 and eventually implemented would mean that old vehicles plying on the roads will be phased out. Such vehicles that are major contributor of environment pollution are the ones that will be targeted under Scrappage policy. Usually old vehicles that have had their run for between 15-20 years are likely to be considered.

A lot of it also depends on how fit the vehicle is for driving. Earlier it was widely reported in the media that if a vehicle failed thrice during fitness test, it would be directly sent for scrapping.

In July, 2020, Zeebiz.com had reported that the Modi government is not ready to accept the 1 percent incentive offered by auto companies in the most awaited scrappage policy. Sources privy to the information had said that the government wants to favour consumers and has asked auto manufacturers to meet the global standards of 4-6 percent scrappage incentive.

It may be recalled that addressing a meeting via video conferencing in May 2020, Transport and Highways, Shri Nitin Gadkari had said that the government is planning to introduce vehicle scrappage policy. Recycling clusters may be started near the ports, which will boost automobile manufacturing industry in the country.

The automobile sector believes that vehicle scrappage policy by the government will be able to arrest the gloomy auto sales and boost job growth in the sector.

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It may be recalled that the Ministry of Road Transport & Highways had floated a concept note on ‘Vehicle Fleet Modernization Programme’ was  May 26, 2016. This programme was aimed at ensuring phasing out of older polluting vehicles and enable their replacement with fuel efficient and environment friendly vehicles.