The Minister of Road Transport and Highways (MoRTH) Nitin Gadkari recently said that the Cabinet will soon decide on the proposed vehicle scrapping policy. The union minister stated that he has cleared a cabinet role on the proposed policy and the finance ministry has also approved the same. "I have signed the file for the cabinet note on the policy for the scrapping of old vehicles. Finance Ministry has approved the note on it," Gadkari said on the sidelines of an event.
Adding further, Nitin Gadkari said that the note will now be circulated to ministries concerned and the Cabinet is likely to take a call on it soon. He said the proposed policy once approved will be applicable on all vehicles including two and three-wheelers. The policy had previously gone for a fresh round of consultation with the stakeholders on the direction of the Prime Minister's Office.
The scrappage policy is said to be a part of the stimulus package that OEMs have requested from the government to infuse demand in the auto sector. The auto industry has been reeling from a downward for the past ten consecutive months and is in dire need of an external push to revive sales. More recently, the Finance Minister Nirmala Sitharaman announced a Tax reduction for corporates in a bid to infuse growth across sectors.
Nitin Gadkari had previously said that once the scrappage policy is approved, India could emerge as a hub for automobile manufacturing as key raw material available from scrapping steel, aluminium and plastic are bound to be recycled. This, in turn, will bring down automobile prices by "20-30 per cent."
The government also floated a Voluntary Vehicle Fleet Modernisation Programme draft in May 2016 that proposed to take 28 million vehicles over 10 years old, off the road. A committee of secretaries recommended to the ministry redesigning of the scheme for greater participation of states with partial support from the Centre. The committee had suggested that the "scheme may dovetail a calibrated and phased regulatory approach for capping the life of vehicles together with stricter implementation of emission norms and accordingly a revised consultation paper got in-principle nod at PMO".
On July 26, 2019, the government proposed amendments to Motor vehicle norms to allow scrapping of vehicles older than 15 years in a bid to speed up adoption of electrical vehicles. In a draft notification, the government had proposed renewal of fitness certificates for vehicles older than 15 years every six months, instead of the current timeframe of one year. The notification also stated that the newly purchased vehicles will be exempted for the payment of fees for registration certificate and assignment of new registration mark, only upon scrapping the old vehicle in the same category.