Will the 5 percent rebate on Old Vehicles Boost the Automobile Sector?


News Update: Another reason for those who are planning to upgrade or buy a new vehicle. As per the statement of Union Minister Mr Nitin Gadkari, one can avail 5% additional rebate on the exchange of Old Vehicle under the Vehicle Scrappage Policy. Personal vehicles to undergo a fitness test post 20 years of registration as per the Voluntary Vehicle Scrappage Policy being introduced during the Union Budget 2021-22.

An additional 5% rebate provided by the Auto manufacturers may influence the buyers to seek exchange benefits or upgrade. Additionally, one shall also be benefitted from the green tax and levies on old polluting vehicles which are a major part of the policy. Automated fitness centres shall be introduced across the country, where the vehicles will have to undergo the mandatory fitness test.

Under the Public-Private Partnership (PPP) scheme automated fitness tests shall be set up. The government shall aid the private partners and State Government for scrapping centre- stated the minister.

Heavy fines and confiscation of vehicles shall be imposed if the vehicles are being used even after Failing the automated fitness test. This shall be abided strictly to ensure the success of the policy. (Notifications of the Vehicle Scrappage Policy on fitness criteria to be notified in a matter of 2-3 weeks)

The said policy is expected to be an advantage for the sector, considering the stress of pre and post-pandemic impact. With an expectation of a 30% boost to the automobile sector in India with a turnover of ₹ 10Lakh cr. in years to come from the current ₹4.5 lakh cr. approximately leading to India being the Automobile Hub – stated the minister.

On implementation of the policy, scrapped items like, plastic, rubber, steel, aluminium etc. shall come in use for producing automobile parts resulting in cost reduction by 30-40%. This shall also increase the export by ₹ 3lakh cr. from the current ₹ 1.45lakh cr.

With “Green Tax” already being introduced, the state governments shall be notified under the Motor Vehicles Act for implementing the green tax on vehicles causing pollution. However, the ministry is working on the Structure and framework of the scrappage policy – stated Mr. Giridhar Aramane – Sec. Road Transport and Highways

The ministry projects 50k jobs to be created with a new investment of ₹ 10k crores.

Electric Vehicles and strong hybrid vehicles functioning on fuels like CNG, LPG and ethanol shall be granted exemption on green tax. Green Tax implementation shall result in curbing pollution and protect the environment. The Ministry also stated of utilizing the funds collected via green tax in solving the pollution issues.
The Ministry passed the green tax proposal for a consultation to the State government wherein, vehicles shall be charged 10-25% of road tax which are older than 8 years during the renewal of fitness certificate.

Will the Vehicle Scrappage policy benefit or add further trouble to the effected automobile sector shall be learnt in times to come.

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