The on-going lockdown has put a halt to major economic activities in order to prevent the
spread of the disease. Among economic activities, it has also resulted in the uncertainty of parliamentary processes and policies as people raise questions regarding the implementation of the vehicle scrappage policy.
“Vehicle Scrappage Policy”
On July 26, 2019, the government proposed amendments to the Motor Vehicle Act to allow the scrapping of vehicles older than 15 years in a bid to speed up the adoption of electric vehicles.
In a draft notification, the government had proposed renewal of fitness certificates for vehicles older than 15 years every six months, instead of the current timeframe of one year. The notification also stated that the newly purchased vehicles will be exempted for the payment of fees for a registration certificate and assignment of the new registration mark, only upon scrapping the old vehicle in the same category.
The vehicle scrappage policy, which awaits clearance from the finance ministry, aims to
eliminate the fleet of old polluting vehicles and boost demand. The proposed policy had got a fresh push in August last year even when the automobile sector reeled under slowdown pressure. Separately, the road ministry had issued draft guidelines in October to set up vehicle scrapping centres in the country to protect the environment and promote a legally-backed dismantling and scrapping industry.
“Ministry stated efforts to bring policy into action soon”
Road transport and highways minister Nitin Gadkari had stated earlier that the ministry is
pursuing the long-delayed vehicle scrapping policy to support the domestic automobile industry amid the COVID-19 pandemic.
“I have been trying to pursue the scrapping policy for the last two years. We need cooperation from other ministries, stakeholders. I have told the secretary to follow it up as soon as possible.
This is one of the steps to boost the industry because it will reduce production,” Gadkari said in a video conference with the society of Indian automobile manufacturers (SIAM).
“I will find out what are the obstacles. We will clear it and go ahead,” he said.
“Slow down in the automobile industry”
The current COVID-19 pandemic has made the situation for the local automobile sector worse as it was already struggling prior to the lockdown as a result of low demand in the market. The automobile industry continues to expect tepid demand in the near term as it believes that normalcy in businesses may not be restored immediately even if the lockdown is lifted completely. The enterprise owners were looking forward to this policy as it showed immensely promise of increasing sales for the local industrial units.
However, the continued delay led to discontent among these owners who had been given hope by the Finance Minister Nirmala Sitharaman who had announced several initiatives for this industry which aimed at increasing production and capacity utilization and would include the vehicle scrappage policy.