Car buyers can soon avail 5 per cent rebate on new car purchase under vehicle scrappage policy

- Automobile manufacturers to provide five per cent rebate on new car purchases 

- The policy will also have provisions of green taxes and other levies on old polluting vehicles

In an effort to improve new car sales and upgrade to emission friendly and safer cars, the Indian Government has incentivised the scrapping of old cars. Earlier in February, the Union Budget 2021-22 announced the voluntary scrappage policy to phase out old and unfit vehicles. Under the proposed policy, the life for private vehicles has been set at 20 years, while for commercial vehicles the life is set at 15 years. If the vehicle fails the fitness test more than thrice, the vehicle might be subjected to mandatory scrapping.

The ministry of road transport and highways is formulating the scrapping policy. The ministry will issue the criteria for vehicle scrapping centres, revised vehicle re-registration and fitness rules, which will also form the eligibility criteria for a vehicle to be scrapped. Nitin Gadkari, Union minister has revealed to the media that the automobile manufacturers will provide five per cent rebate on new car purchases in lieu of scrapping the old vehicles.

Apart from the rebate, the policy will also have provisions of green taxes and other levies on old polluting vehicles. These vehicles will undergo mandatory fitness and pollution test in automated facilities. The automated fitness centres will be set up throughout the country and under the public private partnership (PPP) mode. 

Once the system is in place, driving vehicles that fail to pass automated tests will attract huge penalties and can also be impounded. Gadkari stated that the policy will lead to new investments of around Rs 10,000 crore and create as many as 50,000 jobs.