Government announces 5 percent rebate on new cars for scrapping an old car

The Indian Government has announced a 5 percent rebate on the purchase of a new car, if the old car has been scrapped under the new vehicle scrappage policy. The rebate, which will be provided by the manufactures, should provide greater incentive for people to junk their older vehicles.

• Government incentivises voluntary scrappage of old vehicles with 5 percent rebate
• Heavy penalties on vehicles that fail automated tests
• Scrappage policy expected to provide boost to Indian auto industry

Vehicle scrappage policy: Additional details

Along with the announcement of the rebate, the Union Minister for Road Transport and Highways, Nitin Gadkari, also said that the scrappage policy includes automated fitness and pollution tests for personal vehicles older than 20 years, and for commercial vehicles older than 15 years. He also said that vehicles that fail the tests will attract large penalties and will also be impounded. The tests will be set-up under the public private partnership (PPP) mode, while the government will assist private partners and state governments for scrapping centres.

Vehicle scrappage policy to boost auto industry

Nitin Gadkari also talked about how the policy could lead to a 30 percent boost to the Indian automobile industry’s turnover, from the present Rs 4.5 lakh crore to Rs 10 lakh crore in the years to come; no definite timeline was mentioned though.

He added that once the policy comes to practice, the availability of scrapped material such as steel, plastic, rubber, aluminium, etc, will increase and be used in manufacturing of automobile parts, which in turn will reduce their costs by 30-40 percent.

Vehicle scrappage policy for greener tomorrow

As we had reported earlier, a Green Tax that will be levied on older vehicles to de-incentivise their use as they are a greater contributor to pollution. The government reports that these vehicles are estimated to cause 10-12 times more pollution than the latest models. Speaking on this, Gadkari said initially about one crore polluting vehicles would go for scrapping. Of this, an estimated 51 lakh will be light motor vehicles (LMVs) older than 20 years and another 34 lakh LMVs that are above 15 years. It would also cover 17 lakh medium and heavy motor vehicles, which are above 15 years, and currently without valid fitness certificates, he said.

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