Context: Recently, the Ministry of Road Transport and Highways (MoRTH) has formulated a note for Cabinet – on creation of an ecosystem for voluntary phasing out of unfit and old polluting vehicles.
Key Points

• Under the vehicle scrappage policy, the government proposes amendments to motor vehicle rules to allow scrapping of vehicles older than 15 years.
• The proposed policy, once approved, will be applicable on all vehicles.

Environmental Significance

• The move will aid environment-friendly phasing out of polluting old vehicles and spur adoption of electric vehicles. This would play a critical role in reducing air pollution in the cities.

Economic Significance

• With this new policy India could emerge as a hub for automobile manufacturing as key raw material available from scrapping steel, aluminium and plastic were bound to be recycled, bringing down automobile prices by “20-30%.”
• This would also help reduce Indian oil dependence and help improve the Current account deficit of which oil imports form a major proportion.
• This would help reduce import of critical raw material from other countries helping improve India’s trade balances with such countries.
• This policy would spur investments in the automobile sector, which would help economic revival in India and will also help generate additional employment opportunities.