While passenger cars, trucks, buses, two- and three-wheelers older than 15 years will be taken off the road under the vehicle scrappage policy to be announced soon, vehicles above this age could still ply on the road provided they get a fitness certificate from the designated authority and registered anew, according to sources. Such fitness will come at a cost of around Rs 40,000 for a passenger vehicle and for a fee upwards of Rs 50,000 for each commercial vehicle.
The fitness certificate will be for a period of five years for passenger vehicles and for one year in the case of commercial vehicles. The certifications could be renewed after the expiry of the periods, but there could be an upper limit on the number of such renewals.
Those who want to dispose of their vehicle before 15 years will be given a certificate that will take care of the cost of registration for the new car but no cash incentive will be given by the government to anyone, including those who don’t want to buy a new vehicle. At the same time, the owner of an entry-level car may not be allowed to exchange the “free registration” certificate while buying a new high-end model, the sources added.
“The vehicle scrappage policy will be applicable throughout the country and it will be applicable to all kind of vehicles. A Cabinet note on the policy has already been circulated and we are hoping that the cabinet will take it up soon,” a senior government official said. Experts say the cost of inspection as to whether the car is fit or not and that of the renewal of the registration are way too expensive and may not enthuse users to make use of the policy voluntarily and hence, in many cases, it will lead to a chaos if not arbitration.
“The ministry of road transport and highways (MoRTH) should have taken the lead from the developed nations such as the US and Germany,” an expert said. MoRTH has indeed taken a cue from the developed nations. The US started its Car Allowance Rebate System (CARS) or ‘Cash for Clunkers’ programme, in 2009. Vehicles turned in for exchange under the programme needed to be less than 25 years old. The programme offered a purchase rebate on the new car of $3,500-4,500 per unit depending upon the type of the car and the difference in the fuel economy between the exchanged vehicles.
Germany’s ‘Umweltpramie’, launched in January 2009, is the largest of its kind till date worth €5 billion. Cars of over nine years were eligible under the scheme. Germany’s scrappage programme acted as an economic stimulus for the auto industry and paid out an equivalent to $3,590 per unit as a purchase incentive for a new €4 compliant car in exchange for every car that was sent to scrap. The UK’s vehicle scrappage scheme was introduced in 2009 with an initial budget of €300 million, targeting replacement of 3 lakh vehicles that were older than 10 years at the time. The UK government’s grant of €1,000 per new car purchased under the scheme, however, was contingent upon an equal rebate being provided by the OEM.
Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.