Scrapping old vehicles could fetch extra sops

Sweetened scrapping policy may be rolled out after general election

- Nehal Chaliawala & Mihir Mishra

Owners of old and polluting automobiles may get additional benefits to scrap them in the near future, two people familiar with the matter said, with the government reviewing the existing scrappage policy that has found few takers so far.

The road transport ministry is discussing additional benefits to encourage scrapping, and the prime minister's office (PMO) will greenlight the final policy, the people cited above said on condition of anonymity. The policy may be rolled out by the new government that takes office after elections likely in April and May.

The scrappage policy floated in 2021 had proposed incentives to be given by manufacturers and state governments. The government had estimated that scrapping will attract investments of around ₹10,000 crore and create 35,000 jobs, something that failed to materialize as owners chose to sell old vehicles in rural areas instead.

"The reason for the failure of this scheme is a lack of incentives," said a government official, one of the two people cited above. "So, the plan is that both the government and automobile manufacturers offer incentives to the consumers - government incentives may come in the form of taxes, and auto manufacturers incentive could come in the form of discounts on the price of the vehicle," the official added.