Junk Old Car & Get 5 Percent Rebate on New Car Purchase

All private vehicles over the age of 20 years and commercial vehicles over the age of 15 years are eligible for the fitness test.
  • Published On: 09/03/21
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News Highlights

  • The Vehicle Scrappage Policy will be a boon to the automobile sector.
  • The automated fitness test centres will be set up under public-private partnership mode.
  • The policy will lead to new investments of around Rs 10,000 crores.

The Vehicle Scrappage Policy was announced at the 2021 Union Budget last month. Under this policy, if a consumer is planning to junk the old vehicle and purchase a new one, then he/she will get a 5 percent rebate from the automakers. 

Coming back to the Vehicle Scrappage Policy, all private vehicles above the age of 20 years and commercial vehicles above the age of 15 years will undergo a fitness test. Talking about the Automated fitness test centres, they will be set up under public-private partnership mode. All the vehicles that fail to pass the automated tests will have to pay huge penalties. It is being assumed that this policy is going to be a boon for the automobile sector thereby making it one of the most profitable sectors.


"There are four major components of the policy...Apart from rebates, there are provisions of green taxes and other levies on old polluting vehicles. These will be required to undergo mandatory fitness and pollution tests in automated facilities. For this automated fitness centres would be required throughout the country and we are working in that direction. Automated fitness tests will be set up under public-private partnership (PPP) mode while the government will assist private partners and state governments for scrapping centres,” as commented by Union minister Nitin Gadkari. 

Furthermore, this Vehicle Scrappage Policy will lead to an increase in the vehicle demand thereby boosting the revenue. Also, the ancillary industries will come up in large numbers thriving junk vehicles. As of now, the structure and framework of the Scrappage Policy are under work. The details of the same will be shared separately by the Ministry.  

He further added, "Automobile industry turnover which is Rs 4.5 lakh crore at present is likely to swell to Rs 10 lakh crore in years to come with India becoming an automobile hub."

Besides these, the policy will lead to new investments of around Rs 10,000 crore. It will also create as many as 50,000 jobs. Also, the Government is planning to impose a green tax on old polluting vehicles with an aim to protect the environment and curb pollution.

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Samreen Pall
Author Samreen Pall

A Computer Science graduate but a writer at heart, Samreen has one motto that she swears by: 'Everything is dull and useless if it has no drama in it.' This motto comes to life through her writing and storytelling style. She is the Senior Lead - Content Writer at Droom Technology currently and has a total experience of 5 years. In the past, she has worked with renowned brands while creating and curating amazing content for these brands. She is an avid traveller and loves a quiet sunset on a mountain top.

  • Published On: 09/03/21
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