New vehicle scrappage policy benefits all except truck owner-drivers

The new scrappage policy announced by Union Road Transport and Highways Minister Nitin Gadkari on Thursday was one of the most awaited policies since its announcement. This policy will definitely boost the growth of the automobile industry but will also make a large number of drive-cum-owner truck operators go out of business.

The auto sector had been witnessing a sharp slowdown in sales since 2019 and the policy has opened up the doors for growth in many many ways. The policy will likely increase India’s automobile industry turnover to ₹10 lakh crore from the current ₹4.5 lakh crore and create as many as 35,000 jobs, Gadkari said. The new policy will be a “win-win” policy that will help improve fuel efficiency and reduce pollution, the union minister further added.

The private vehicles are proposed to be de-registered after 20 years if found unfit or in case of a failure to renew the registration. As a disincentive measure, increased re-registration fees will be applicable for private vehicles too after this period. The government is going to maintain a database for the vehicles scrapped every year.

The policy proposes to de-register commercial vehicles after 15 years in case of failure to get the fitness certificate. As a disincentive measure, increased fees for fitness certificates and fitness tests may be applicable for commercial vehicles 15 years onwards from the date of initial registration.

India has 17 lakh medium and heavy commercial vehicles that are older than 15 years without any valid fitness certificate, 51 lakh light motor vehicles older than 20 years, and 34 lakh light motor vehicles older than 15 years, according to the transport ministry. The average age of commercial vehicles is over 10 years and the private ones, 10-15 years.

The government has given various incentives like 4-6% of the price of the new vehicle would be reduced if you scrap your old car, a tax rebate of 25% for private vehicles and 15% of commercial vehicles is also being offered, Manufacturers too will give discount against scrapping certificate and registration fees may also get waived off. The move is expected to reduce pollution, create job opportunities, through the registered scrapping centres, and boost demand for new vehicles.  All in all, it had a positive and impactful effect on private vehicle users and the auto industry.

But, the truck owners and drivers are a bit disappointed as there are many trucks that are over 15 years of age but are plying short distances and for government organizations and are owned by their drivers.

“The freight rates are not lucrative for them to scrap their old vehicles and go for new vehicles. The EMI (equated monthly installment) for a new truck will be about Rs 50,000 which will not be affordable by such operators,” M.R. Kumaraswamy, President, State Lorry Owners Federation-Tamil Nadu.

A proposal has been sent to the government to look after concerns so that it should benefit everyone.