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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.

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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."

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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.

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