2021 Budget Highlight for Buyers: Old Car Scrappage Policy
Indian Budget 2021 Highlights for Auto Industry & Car Buyers: Old Vehicle Scrappage Incentive Program from April 1,2022
The Finance Minister of India, Nirmala Sitharaman announced the much-awaited voluntary vehicle scrapping policy to phase out inefficient and polluting old vehicles during the 2021-2022 Budget. The introduction of the scrappage policy has being talked about for a long time to promote use of more eco-friendly and safer vehicle while reducing the foreign currency spend on oil import with scrapping of old vehicle with higher fuel consumption. It would be voluntary program for private vehicles older than 20 years and in case of commercial vehicles older than 15 years.
There would be a mandatory inspection at fitness centres for these 20 year old vehicles and probably the private vehicle’s registration needs to be renewed after 20-year based on passing the fitness test. The government may implement an addition green tax for the vehicles over 20 years old and have a high fee for fitness tests to ensure that vehicle owners don't continue to use 20 year old and polluting vehicle.
Over 50 lakh vehicles are expected to be qualified in this program. The vehicle owners may get some government subsidy (e.g tax benefit) as an incentive to buy eco-friendly, safer new cars and electric vehicles with latest technologies
Details of the policy are still in works and is expected to be revealed in the next 1-2 months with planned implementation from April 1, 2022
The other bit of news was the increase in custom duty on some Auto parts like ignition wiring sets, safety glass from 7.5% – 10% to 15 percent to encourage OEMs and Suppliers to manufacturer in India rather than importing them from countries like China.
There was no direct announcement for promotion of EVs or charging infrastructure or reduction in GST rates for automobiles.
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