Forced Vehicle Scrappage Policy for ‘end of fixed life vehicles’ offering no tax/levi exemptions will be bad

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Scrapping vehicles simply on basis of ‘Age’ may not be Socio-Economically that fair in India

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‘Vehicle Scrappage Policy’ without subsidy/ tax reduction for New purchase will be more unfair

Not fair to include Rs. 5 Lakh incentive for replacement of Old trucks & not for Old Buses in REVIVAL’ package

Daya Sagar

In July 2019 Transport and Highway Minister Nitin Gadkari was said to have confirmed while speaking in virtual mode at the 60th annual session of ACMA that scrappage policy was in its final stages. Of course it was expected that such scrappage policy will encourage customers to go in for new purchases since it may be backed up by government incentives. No doubt Mr. Gadkari did indicate that the policy will benefit the vehicle industry. Earlier it had been reported by PTI on 16- 03-2018 < “A high level meeting, chaired by Principal Secretary to the prime minister and comprising secretaries from different ministries in principle approved the vehicle scrapping policy today, the official, who did not wish to be quoted, said. The policy will be effective from April 1, 2020, and life of the commercial vehicle for scrapping has been fixed at 20 years”>, It was also reported that matter will go to the GST Council as well for looking into reduction in GST for such cases. No doubt some time it was also reported that Mr Gadkari had said the policy was needed to curb vehicular pollution as well as given the annual 22 per cent growth rate of automobile industry. It can not be overlooked that going by the indicators coming from the events and statements The Society of Indian Automobile Manufacturers (SIAM), too has been has been in a way urging the government to formulate a scrappage policy to phase out older and polluting vehicles. Nothing wrong in doing away polluting vehicles the engines of which can not be rebuilt to acceptable limits of performance but scraping vehicles simply on age basis and that too without any incentive in the form of reduced GST / Reduced Ex. Duty/ reduced road& registration levies to the unwilling owner will be unfair.
Nitin Gadkari Union Minister for ROAD TRANSPORT AND HIGHWAYS has been quoted as having said in an interview to an English daily reported on 04-01-2021< “We are already in the process of making (vehicle) scrapping policy. With the scrapping policy, I am confident that in the next five years India will be the number one manufacturing hub in the world”>. No doubt last 21 September ( 2020) it was also reported referring to some government sources that the upcoming government scrappage policy for ‘end of life vehicles’ will offer no tax exemptions to owners, and “incentives, if any, will have to offered by OEMs (original equipment manufacturers)..
It was reported on January 21, 2016 that the Ministry of Road Transport and Highways (MoRTH) is planning to formulate a new standardized ‘end of life’ policy for scrapping of old vehicles in India and it was also indicated as per the proposals under may be the buyers will have to pay around 50% per cent excise duty on purchase of new vehicles in exchange of their old vehicles where possibly automobiles that would be are fully operational / BS-III norms compliant will be exempted while vehicles which are found to be polluting or are non-operational will go through the city-specific/statespecific regulations and be sent for scrapping. Even it was reported that provisions for offering incentives for discarding old automobiles – the Ministry had proposed tax exemptions of up to Rs 30,000 for passenger vehicles and up to Rs 1.5 lakh for commercial vehicles.On 26-05-2016 The road transport and Highways Ministry had released the concept paper for its proposed voluntary vehicle modernization policy that aims to take out the old polluting vehicles (vehicles older than 11 years) off road but that appeared to bear a burden of huge mass of vehicles. The concept note was said to have also touched cut in excise tax up to 50 per cent, fair value for the scrap and discounts by automobile manufacturers thereby reducing the overall coast of new vehicle by 12 % or so. In July 2016 the Centre had proposed amendments to the motor vehicle rules to allow scrapping of vehicles older than 15 years and renewal of fitness for vehicles older than 15 years.In the earlier days it was also reported that indicators were there for Center having asked States Governments to offer a rebate on road tax to vehicle owners, against the presentation of scrapping certificates. Speaking at the Society of Indian Automobile Manufacturers convention in 2020 Union Minister Prakash Javadekar also confirmed that the new scrappage policy will be announced soon.
But so far government has not officially come out with possible incentives that would be part of scrap policy. No doubt a vehicle that fails the fitness test for a prescribed number of performance test ( say three ) should be subjected to mandatory scrapping.
So far the government has fixed only age of the vehicle from the date of registration for scrapping a vehicle which surely is professionally not fair. So there is a need for a scientific scrapping policy. Even a bench headed by National Green Tribunal Chairperson Justice Adarsh Kumar Goel too had asked inearly 2020 for putting in place a proper mechanism to set up authorised recycling centers compliant with environmental norms in view of there being a large number of ”End of Life Vehicles” – age old vehicles .
It was on 07-02-2020 that Union Minister for Road Transport and Highways, Nitin Gadkari had said that the Vehicle Scrappage Policy had been cleared from his end and is in the last lap of finalization awaiting clearance from the cabinet. On being asked about subsidy, he said it is upon the cabinet to decide subsidies.The proposed policy is aimed to create new demand stimulus in the auto sector which has been facing one of the worst slowdowns.
Even Finance minister Nirmala Sitharaman was quoted as having said that several rounds of inter-ministerial consultation pertaining to the scrappage policy have already been done and it is close to finalization. Road Transport and Highways Ministry GOI had earlier issued draft guidelines in October 2020 to set up vehicle scrapping centers in the country, to protect the environment and promote a legally backed dismantling and scrapping industry.< “Ministry of Road Transport and Highways (MoRTH) has formulated a note for Cabinet on creation of an ecosystem for voluntary and environment friendly phasing out of unfit and old polluting vehicles,” Minister of State for Road Transport and Highways VK Singh told Rajya Sabha in reply to a query.> . PTI had reported on 04 -11- 2020 .The policy was said to have been sent for a fresh round of consultation with stakeholders on the direction of the PMO. But it has not yet been known that what has been the response of vehicle owners / commercial transport unions / associations.
So far the scrappage policy being talked about has been seen by some more as part of the stimulus package requested by OEMs for the auto sector’s revival.Is it to benefit only the businessman, Manufacturer ?
Scrapping vehicles simply on basis of “Age” may not be Socio-Economically that fair in India . A blanket age based “Vehicle Scrappage Policy” without subsidy/ tax reduction for New purchase will be more Unfair
Daya Sagar is a
Sr Journalist and Social Activist 9419796096 [email protected])

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