Discount on New Vehicles Against Scrapping Certificates (GS Paper 2, Government Policies)
Overview
- The Uttar Pradesh government’s recent initiative to offer discounts on new vehicles in exchange for scrapping old ones reflects a broader national strategy aimed at modernizing the vehicle fleet, reducing pollution, and promoting environmental sustainability.
- This effort is part of the Vehicle Scrapping Policy 2021, also known as the Voluntary Vehicle-Fleet Modernization Program (V-VMP), which incentivizes the disposal of old, unfit vehicles in favor of purchasing newer, more efficient models.
Key Aspects of the Policy
Discount Structure:
- Incentive Amount: Under the new policy, auto manufacturers will provide discounts ranging from 1.5% to 3% on the purchase of new vehicles when customers present a scrappage certificate. The maximum discount is capped at Rs 25,000.
Discount Duration:
- Commercial Vehicles (CVs): Discounts are available for a period of two years.
- Passenger Vehicles (PVs): Discounts are offered for a duration of one year.
Categorization and Role of Digital Agency:
- Digital Agency: The agency V-Form has been appointed to manage advertisements related to the policy. V-Form will oversee the promotion of videos, tweets, posts, and reels that highlight the benefits of the scrappage policy and government schemes.
Detailed Policy Framework
Voluntary Vehicle-Fleet Modernization Program (V-VMP):
- Objective: The V-VMP aims to phase out old, unfit vehicles from Indian roads. It is designed to address the environmental impact of outdated vehicles and to enhance road safety.
Scrappage Rules:
- Passenger Vehicles: Vehicles older than 20 years must undergo a fitness test. If they fail, they will be scrapped. If they pass, registration can be renewed for an additional five years.
- Commercial Vehicles: These must pass fitness tests every two years for the first eight years and annually thereafter, up until they reach 15 years of age.
Incentives Provided:
- Discount on New Vehicles: Auto manufacturers are encouraged to offer a discount of up to 5% on new vehicle purchases upon submission of a scrappage certificate.
- Concessions in Motor Vehicle Tax: State governments are advised to offer a concession of up to 25% on motor vehicle tax for non-transport vehicles and up to 15% for transport vehicles.
- Waiver of Registration Fees: Registration fees for new vehicles are waived for those presenting a scrappage certificate.
- Scrap Value: The value obtained from scrapping an old vehicle is typically around 4-6% of the ex-showroom price of a new vehicle, which serves as an additional financial incentive.
Disincentives:
- High Fitness Test Fees: For vehicles older than 15 years, the costs associated with fitness tests and certificates are higher.
- Increased Registration Renewal Fees: Private vehicles older than 15 years face elevated renewal fees.
- Green Cess: An additional green cess of 10-15% will be levied on old vehicles, alongside road tax.
Benefits of the V-VMP
Environmental Benefits:
- Pollution Reduction: By scrapping up to 1 crore vehicles that are no longer fit for the road, the policy aims to cut vehicular emissions by 15-20%. This contributes significantly to improving air quality and reducing the overall environmental footprint.
- Improved Fuel Efficiency: New vehicles adhering to BS VI standards are designed to be more fuel-efficient and produce 25% less NOx (Nitrogen Oxides) compared to older models, particularly diesel engines.
Economic and Industry Impact:
- Stimulating Demand: The scrappage policy will boost demand for new vehicles as old ones are replaced. This is expected to revitalize the automobile industry and stimulate economic growth.
- Formalisation of the Scrapping Industry: The policy aims to create a well-organized and transparent scrapping sector, leading to better management of end-of-life vehicles and supporting job creation within the recycling industry.
- Enhanced Vehicle Safety: New vehicles come equipped with advanced safety features and technology, leading to improved road safety and reduced accident rates.
Promotion of Circular Economy:
Concept of Circular Economy:
- Definition: A circular economy focuses on maintaining the value of products, materials, and resources in the economy for as long as possible. It involves processes like maintenance, reuse, refurbishment, remanufacture, recycling, and composting to minimize waste and environmental impact.
Principles of Circular Economy:
- Eliminate Waste and Pollution: Designing systems and products to avoid waste and environmental damage.
- Circulate Products and Materials: Keeping products and materials in use at their highest value through various methods.
- Regenerate Nature: Supporting the natural environment by contributing to its regeneration rather than depleting resources.
India’s Initiatives:
India has introduced several regulations and rules to support the circular economy, including:
- Battery Waste Management Rules, 2022
- Plastic Waste Management (Amendment) Rules 2022
- E-waste Management Rules 2022
- Extended Producer Responsibility (EPR) Certificates
Conclusion
- The Vehicle Scrapping Policy 2021 represents a pivotal move toward reducing vehicular pollution and promoting environmental sustainability in India.
- By incentivizing the scrapping of outdated and inefficient vehicles, the policy not only supports the adoption of newer, cleaner models but also aligns with the principles of a circular economy.
- The anticipated benefits include significant reductions in emissions, improved road safety, enhanced fuel efficiency, and stimulation of economic growth through increased demand for new vehicles.
- This comprehensive approach underscores India's commitment to environmental preservation and economic development, positioning the nation as a proactive leader in global standards of emission control and resource management.
