Budget 2021: Scrappage Policy To Cover Over 1 Crore Vehicles, See New Investments Worth Rs 10,000 Crore
Vehicles travel along a highway in an aerial photograph taken in Delhi. (Photographer: Anindito Mukherjee/Bloomberg)

Budget 2021: Scrappage Policy To Cover Over 1 Crore Vehicles, See New Investments Worth Rs 10,000 Crore


Finance Minister Nirmala Sitharaman on Monday announced the much-awaited voluntary vehicle scrappage policy to phase out old and polluting vehicles.

Presenting the Budget for 2021-22 in Parliament, 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.

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

He further said the policy would cover over 1 crore light, medium and heavy motor vehicles.

"The policy would cover an estimated 51 lakh light motor vehicles 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.

These vehicles are estimated to cause 10-12 times more pollution than the latest vehicles, he said.

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

He said the finer details of the policy will be unveiled within 15 days.

During her speech, Sitharaman said that details of the scheme will be separately shared by the Road Transport and Highways Ministry.

"We are separately announcing a voluntary vehicle scrapping policy to phase out old and unfit vehicles. This will help in encouraging fuel efficient, environment friendly vehicles, thereby reducing vehicular pollution and oil import bill," she said.

Vehicles would undergo fitness tests in automated fitness centres after 20 years in case of personal vehicles, and after 15 years in case of commercial vehicles, she added.

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.

"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 Jan. 15.

The minister had also said that once the policy is approved, India will become an automobile hub and there will also be reduction in the prices of automobiles.

He had said recycled material from old vehicles will help reduce the prices, adding that the automobile industry's turnover, which is Rs 4.5 lakh crore with Rs 1.45 lakh crore exports, will get a boost.

Earlier, Finance Minister Nirmala Sitharaman had said that a policy for scrapping of old vehicles "is in the works" and will be announced after ministries concerned "fine-tune" it.

In May 2016, the government had floated a draft Voluntary Vehicle Fleet Modernisation Programme that proposed to take 28 million decade-old vehicles off the road.

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