Context: Union Transport Minister Nitin Gadkari announced the much awaited vehicle scrappage policy on Thursday.  Speaking in Lok Sabha, he said the policy aims to keep old polluting vehicles from plying on roads. He highlighted that there are 51 lakh vehicles in India which are older than 20 years, 34 lakh vehicles which are more than 15 years old and around 17 lakh vehicles older than 15 years, but do not have vehicle fitness certificates. He said, old vehicles pollute air 10-12 times more compared to vehicles that are fit, and also pose a risk for road safety. Now, with this policy being announced, commercial and private vehicles will be de-registered after 15 and 20 years respectively and their re-registration will be discouraged. Owners of old vehicles will get strong incentives to scrap old and unfit vehicles. Further, the new vehicle scrappage policy will be a win-win proposal for the auto industry. According to Nitin Gadkari, scrapping old vehicles will lead to increased demands for newer vehicles, which will boost the auto sector. And the move will also both the Centre and states to garner more GST. The policy is likely to come into effect later this year. 

The Policy proposes the following—

• It is proposed that commercial vehicles be de-registered after 15 years in case of failure to get the fitness certificate. As a disincentive measure, increased fees for fitness certificate and fitness test may be applicable for commercial vehicles 15 year onwards from the date of initial registration.
• It is proposed that Private Vehicles be de-registered after 20 years if found unfit or in case of a failure to renew registration certificate. As a disincentive measure, increased re-registration fees will be applicable for private vehicles 15 year onwards from the date of initial registration.
• It is being proposed that all vehicles of the Central Government, State Government, Municipal Corporation, Panchayats, State Transport Undertakings, Public Sector Undertakings and autonomous bodies with the Union and State Governments may be de-registered and scrapped after 15 years from the date of registration.
• The scheme shall provide strong incentives to owners of old vehicles to scrap old and unfit vehicles through registered scrapping centres, which shall provide the owners with a scrapping certificate. Some of these incentives include:

(A) Scrap Value for the old vehicle given by the scrapping centre, which is approximately 4-6% of ex-showroom price of a new vehicle.
(B) The state governments may be advised to offer a road- tax rebate of up to 25% for personal vehicles and up to 15% for commercial vehicles
(C) The vehicle manufacturers are also advised for providing a discount of 5% on purchase of new vehicle against the scrapping certificate.
(D) In addition, the registration fees may also be waived for purchase of new vehicle against the scrapping certificate.