Scrapping Pollutants Away

India’s scrappage policy for automobiles has the potential to reduce pollution and the industry’s carbon footprint while creating employment and demand. It’s a $6-billion opportunity

- Sumant Banerji

When Nitin Gadkari, Minister for Road Transport and Highways and MSME, spelt out the contours of India’s first vehicle scrappage policy in mid-March, it was the culmination of a process that started more than a decade ago. The multipronged policy, which seeks to replace ageing and outdated vehicles in favour of modern and more technologically advanced versions on the road, would effectively come into force only from June 1, 2024 when fitness tests become mandatory for most cars and SUVs. Under the new policy, the Ministry of Road Transport and Highways has advised automobile manufacturers to provide a 5 per cent discount on the purchase price of a new car for anybody who buys them after scrapping the old vehicle. It has also asked state governments to waive off registration fees on the new vehicle. This will be on top of the scrap value of the old vehicle, which could be anywhere around 4-6 per cent of the ex-showroom price of a new car. For heavy commercial vehicles, fitness tests will become mandatory from April 1, 2023.

It could still be anti-climatic, though. Voluntary in nature, the policy announced so far feels more like a work in progress than a finished product. None of it is binding as of now. In automotive parlance, it is akin to a clay model and not a metal body. From his own end, Gadkari has requested the finance ministry to offer some rebate in Goods and Services Tax (GST), but a response is awaited.