Union Budget 2021: Finance Minister Announces Vehicle Scrappage Policy

Strict fitness tests ahead for private and commercial vehicles

The Union Budget 2021 has a bunch of key implications for the auto industry as such. The most significant of the lot is regarding the vehicle scrappage policy. The government had earlier announced a scrappage scheme for the vehicles of the central and state governments, which would have vehicles older than 15 years scrapped. Though approved on Jan 25, this would come into effect on 1 April, 2021. The Union Budget now has this scheme lined for the private and commercial vehicles as well.

Finance Minister Nirmala Sitharamanam has announced that private vehicles older than 20 years and commercial vehicles of more than 15 years of age would be eligible to be scrapped. They would have to undergo stringent fitness tests at government-appointed automated test centers to be able to stay in operation. The in-depth details of the scrappage scheme are said to be revealed by the ministry on a later date.

“We are separately announcing a voluntary vehicle scrapping policy to phase out old and unfit vehicles. This will help in encouraging fuel efficient, environment friendly vehicles thereby reducing vehicular pollution and oil import bill. Vehicles would undergo fitness tests in automated fitness centres after 20 years in case of personal vehicles and after 15 years in case of commercial vehicles.”

Nirmala Sitharaman, Finance Minister

Earlier this year, Union Minister Nitin Gadkari had announced the roll-out of Green tax for both private and commercial vehicles, as part of the Government’s vision to curb the shooting pollution levels. As per the laws, the personal vehicles here require re-registration after 15 years. The owners will be bound to pay Green tax at the time of re-registration of their prized possessions. At present, personal vehicles in polluted cities are required to pay up to 50% of the net road tax as their Green Taxes.

The Budget 2021 has had a major impact on the automotive stocks in the country. Share prices of manufacturers like Tata Motors, Mahindra, and Maruti Suzuki have shot up post budget.

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