Budget 2021: FM Sitharaman Announces New Vehicle Scrappage Policy

This policy encourages vehicle owners to scrap vehicles that are older than 15 years and purchase new ones instead.

FM Nirmala Sitharaman introduced the new vehicle scrappage policy in the Budget on 1 February. Image used for representation.

(Photo:The Quint)

Video Editor: Rahul Sanpui

Finance Minister Nirmala Sitharaman on Monday, 1 February, announced a voluntary vehicle scrappage policy in the Union Budget to phase out old vehicles and to boost the sales of new vehicles.

The scrappage policy is a programme that encourages vehicle owners to scrap vehicles older than 15 years old and purchase new ones instead.

A major advantage of such a policy is that it helps reduce air pollution by removing older and more polluting vehicles from the roads.

Union Finance Minister Sitharaman in her speech said, "We are separately announcing a voluntary vehicle scrapping policy to phase out old and unfit vehicles," she said. "This will help encourage fuel-efficient and environment-friendly vehicles, thereby reducing vehicular pollution and oil import bills."

The Finance Minister also mentioned that personal vehicles will have to undergo a fitness test after 20 years from the date of registration, while the same for commercial vehicles will be 15 years.

Previously, Transport and Highway Minister Nitin Gadkari had approved a proposal for a green tax on old and polluting vehicles and had said that vehicle scrappage policy will give a major push to the automobile manufacturing industry in the country.

Further details of a voluntary vehicle scrapping policy will be announced soon to phase out old vehicles, Sitharaman added.

Catch all live updates of the Budget announcement here.