At a media conference on Tuesday, the Ministry of Road Transport and Highways said that implementation of the scrappage policy will add up to INR 40,000 crore to GST collection as it will boost demand for automobiles. Moreover, raw materials extracted from old vehicles such as lithium-ion can be used in the manufacturing of electric vehicles and hence reduce the cost.
Talking about the scrappage policy, Nitin Gadkari, Minister of Road, Transport & Highways, said, “While the scrappage policy will help to reduce pollution and increase the efficiency of the overall transport mechanism, it will boost the demand for automobiles, increasing the GST collection up to INR 40,000 crore.”
While the government is giving incentives on scrapping vehicles like reduction in road tax and exemption in registration fees, Gadkari urged automakers to give 5% extra concession to consumers possessing scrap certificates to purchase new vehicles.
Gadkari said scrappage policy can enable India to become the leader in automobile manufacturing within five years.
He also pointed out that the policy has the potential to eliminate all the metal exports that India does today. Currently, 86% of lithium-ion is produced in India, and the target is to achieve 100 %, which will be done through scrappage policy.
Emphasising the use of electric vehicles, Gadkari said battery recycling from old vehicles will help bring down the cost of electric vehicles and help manufacturers produce lithium-ion batteries in the domestic market.
Voluntary Vehicle Fleet Modernisation Programme or the vehicle scrappage policy was announced by Prime Minister Narendra Modi on August 13, 2021, in Gujarat. While announcing the policy, he said it will bring an investment of INR 10,000 crore and create thousands of jobs. This investment will go into setting up 450-500 automated testing stations and 60-70 registered vehicle scrapping facilities (RVSF) across the country.