Budget 2021: “Vehicle Scrappage Policy”

02 February 21

According to the new policy guidelines, a vehicle will have to undergo a fitness test, after the accepted 20-year period. While it’s possible for the car to pass a fitness test and acquire a fitness certificate; each fitness test would cost approximately Rs 40,000. This is in addition to the road tax, and possible “Green Tax” that you have to pay while mandatorily renewing your private vehicle’s registration after the 15-year period. Each fitness certificate is applicable for five years, after which the owner of the vehicle will be required to get another fitness test, costing the same. The financial cost of keeping a car in road-ready shape, alone would then dissuade the owner from constantly renewing the certificate.

The Indian automobile industry has been struggling with a severe sales slowdown since 2019 and has been badly hit by the pandemic. And even though the sales have been improving since the latter half of last year, things are still not on track. So, in order to help the Indian auto sector, the Indian government has decided to bring in a voluntary vehicle scrappage policy. This was announced by the Finance Minister Nirmala Sitharaman during her 2021 Budget speech. Now, the details of the vehicle scrappage policy will be revealed by the Ministry of Road, Transport, and Highways but the arrival of the policy is good news for the automakers.