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Monday, April 12, 2021

Can trade scrapping certificate or use it to get discount on new car: Ministry

Announced in the Budget for 2021-22, the new policy is set to be notified soon, and plans to create an ecosystem which provides incentives to old vehicle owners to decide in favour of scrapping, even if the vehicle has residual life.

Written by Avishek G Dastidar | New Delhi |
Updated: March 14, 2021 8:10:21 am
motor vehicle theftMotor vehicle thefts rose marginally in the pandemic and their detection rate went down (File)

THE PROPOSED vehicle scrapping policy will allow owners of old vehicles to claim certificates which can be used to get a discount or a waiver in registration charges while purchasing a new car. In case an owner does not wish to buy a new vehicle, she can even trade the certificate or transfer it.

Announced in the Budget for 2021-22, the new policy is set to be notified soon, and plans to create an ecosystem which provides incentives to old vehicle owners to decide in favour of scrapping, even if the vehicle has residual life.

“We will make the scrappage certificate tradable. Suppose you are scrapping your vehicle, you can sell the certificate and somebody else can claim it. We have consulted the industry and have incorporated their suggestions also,” Giridhar Aramane, Secretary, Ministry of Road Transport and Highways, told The Sunday Express.

“Some benefits in terms of discount, road tax…registration charges we will waive off for people who scrap their cars,” he said

The policy will require commercial vehicles over 15 years and personal vehicles more than 20 years to compulsorily test and queue up for subsequent scrapping. The policy also provides for voluntary fitness tests. For instance, an owner of a 17-year old personal vehicle, can opt for voluntary testing. If the vehicle fails the test, it gets a second chance. If it fails the second time too, the vehicle will have to be scrapped. “…it is voluntary for vehicles below 20 years (personal vehicles), compulsory for unfit vehicles above 20 years,” Aramane said.

At present, personal vehicles have to be re-registered after 15 years, which can extend their life by five years. In the policy, this testing will also be through the Automated Fitness testing centres. Policymakers estimate much of the voluntary testing and scrapping to happen during these five years.


A boost to auto sector

INCENTIVISING scrapping of old vehicles and creating support infrastructure such as fitness centres and scrapping units is critical to nudge owners to get rid of their cars. The government estimates over 10 million vehicles to be older than 15 years. Scrapping these will not only reduce pollution, but also give a big boost to the automobile industry and expand its size by 33 per cent.

The Centre has sanctioned 26 Automated Fitness Centres as a model to state governments. It expects these to come up in the next two years. For the scrapping policy to be effective, states need to be proactive in setting up the support infrastructure. To set up fitness centres, the Ministry of Road Transport and Highways has advised states to provide land for free or opt for a Public Private Partnership model. Even private players can set up these fitness centres, audited by the authorities.

The government will not restrict entry into the scrapping business either. Anyone can set them up, including car makers themselves, the steel industry or others. “We will just insist they adhere to labour laws and environmental laws,” Road Transport and Highways Secretary Aramane said.

Simultaneously, a Green Tax — independent of the scrapping policy — is likely to render keeping old vehicles expensive. Even if older vehicles pass the fitness test, registration charges are likely to be exorbitant, and act as a disincentive.

Continuing with its push to weed out older vehicles, the government on Friday issued a draft notification proposing that registration certificates of motor vehicles owned by the Central Government, State/UT governments, local government institutions, Public Sector Undertakings, State Transport Undertakings, autonomous bodies with Central and state governments, will not be renewed after 15 years. This policy is proposed to be effective April 1, 2022. The ministry has sought suggestions and objections over the next 30 days.

As per data available with the ministry, around 51 lakh light motor vehicles in India are older than 20 years; 34 lakh are older than 15 years, while 17 lakh medium and heavy commercial vehicles are older than 15 years, and without a valid fitness certificate.

The government estimates the scrapping policy, an initiative being pushed by Road Transport and Highways Minister Nitin Gadkari, will create around 35,000 additional jobs by expanding the auto manufacturing industry to around Rs 6 lakh crore from around Rs 4.5 lakh crore now.

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