Union Budget 2021: Scrappage policy to boost auto sector to be announced in 15 days, says Nitin Gadkari

The Union Finance Minister Nirmala Sitharaman announced voluntary vehicle scrapping policy with the aim to phase out old and polluting vehicles. The Road Transport, Highways and MSMEs Minister Nitin Gadkari welcomed the policy saying it will lead to new investment and create jobs.

New Delhi: The voluntary vehicle scrapping policy with the aim to phase out old and polluting vehicles was announced by Union Finance Minister Nirmala Sitharaman on Monday (February 1, 2021).

Road Transport, Highways and MSMEs Minister Nitin Gadkari welcomed the policy saying it will lead to new investment of around Rs 10,000 crore and create as many as 50,000 jobs.

Further he said the policy would cover over 1 crore light, medium and heavy motor vehicles. He said the finer details of the policy will be unveiled within 15 days.

"The policy would cover an estimated 51 lakh light motor vehicles (LMVs) that are above 20 years of age, while another 34 lakh LMVs are above 15 years. It would also cover 17 lakh medium and heavy motor vehicles, which are above 15 years, and currently without valid fitness certificates," Gadkari said.

The policy would cover an estimated 51 lakh light motor vehicles (LMV) that are above 20 years of age, while another 34 lakh LMVs are above 15 years. It would also cover 17 lakh medium and heavy motor vehicles, which are above 15 years, and   currently without valid fitness certificates.

"We have submitted the proposal and I am expecting that we will get approval as early as possible for the scrapping policy," Gadkari had said on January 15.

Outlining the benefits of the policy, Gadkari said it would lead to recycling of waste metal, improved safety, reduction in air pollution, reduction in oil imports due to greater fuel efficiency of current vehicles, and stimulate investment.

The minister also welcomed the increased outlay for the highways sector, to Rs 1,18,000 crores, with the highest-ever capital investment of Rs 1,08,000 crores. While welcoming the increased allocation, Gadkari said that the Ministry’s increased stress on monetization of highways will help in expanding the road network in the country.

Sitharaman said that under voluntary vehicle scrapping policy, personal vehicles would undergo fitness test after 20 years while commercial vehicles would require it after completion of 15 years, she announced while presenting the Budget for 2021-22. 

On July 26, 2019, the government had proposed amendments to motor vehicle norms to allow scrapping of vehicles older than 15 years in a bid to spur adoption of electrical vehicles.