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HomeStoriesIndia's new auto-scrappage policy to accelerate economic Growth, says Nitin Gadkar: discussed...

India’s new auto-scrappage policy to accelerate economic Growth, says Nitin Gadkar: discussed during 2021-22 budget speech

We are a country with a very huge population. This huge population contributes to a very large consumer demand base. Today, let’s discuss automobiles. The automobiles in the country act as a necessity to the current generation. The demand for automobiles is at an all-time high, be it a small two-wheeler or a luxury four-wheeler. The current generation is completely dependent on automobiles, and not to complain the development of the automobile industry has contributed to saving time for people. The number of automobiles becoming scrap every day is also rising, as people are buying new vehicles and the old vehicles become scrap.

In a country where there is a huge population, rising pollution and the number of industries that pollute the environment is growing every day, the rising scrap of these automobiles is not affordable. However, the recently launched policy of the central government to use the vehicle scrappage is gaining much popularity and is expected to be a saviour of the economy and the environment. In this article, we will discuss everything about this policy and why it is necessary. By the end of this article, we will ensure that all of your doubts about the same get clear.

What is the vehicle scrappage policy? 

The vehicle scrappage policy is a central funder policy that aims to replace the old vehicles from Indian roads and utilising them in the way possible. The policy thus launched has various benefits to the economy. It contributes to reducing the high levels of pollution as old vehicles pollute far more than what the new vehicles produce. It will further boost the demand for new vehicles and therefore benefit the growing automobile industry. The new scrappage policy is expected to create additional jobs and will therefore reduce the problem of unemployment in the country too.

Vehicle scrappage policy announced in Lok Sabha - Autocar India

Several big countries like the US, China, Germany and Canada have already introduced their own vehicle scrappage policy in order to boost their automobile industries and to have a hold on vehicular pollution. A large share of the total pollution in the country is contributed by these old automobiles which should have been scrapped by now and therefore the introduction of this policy became a necessity for our country.

The vehicle scrappage policy was first discussed and named during the 2021-2022 budget speech by our finance minister. It was stated that the government will launch a vehicle scrappage policy later this year which will phase out old and unfit vehicles from the Indian roads. A month later, Nitin Gadkari, the Minister for Road Transport and Highways introduced the much awaited vehicle scrappage policy in the Lok Sabha.

What comes under this policy? 

Modi's vehicle scrapping norms won't curb pollution, revive auto — Quartz  India


According to this policy, all the commercial vehicles which have been used for more than 15 years than the date of their manufacture and all the passenger vehicles with more than 20 years of manufacture will be completely scrapped unless they pass a fitness and emissions test. The main idea behind this policy is to phase out old vehicles from the urban areas which are continuously contributing to polluting the nation. Moreover, it is launched in order to revive back the falling automobile industries which have been widely affected by the COVID-19 pandemic and the prevailing lockdowns across the nation.

This policy is expected to reduce the problem of pollution in the nation and will promote fuel-efficient, environment-friendly vehicles and will therefore reduce vehicular pollution and oil-importing costs. Moreover, this policy will also be included in the stimulus package majorly requested by the original equipment manufacturers.

Views of the highway minister on the auto-scrappage policy

Nitin Gadkari, the Union road transport and highway minister recently said that the automobile scrappage policy will boost the economic development as well as the employment generation in the nation. The minister further said that this is a win-win situation for both the centre and state governments as the introduction of this policy will help them earn up to Rs 40,000 crore in goods and services tax (GST).

Everyone around the country, people and experts are praising the launch of this policy. It is said that the decision of launching the scrappage policy was a historic decision and will surely have a positive impact on the nation’s economy and employment.

India's Vehicle Scrappage Policy - Everything Car Owners Should Know

Nitin Gadkari further hinted in reports that this policy will also benefit electric vehicles and will make their large scale introduction in the country much easier. It will pave the way for the electric automobile industries and these industries will surely grow as they are much more efficient than petrol and diesel vehicles. With the rising prices of petrol and diesel, the future of electric vehicles in the country seem very bright.

But how are we so sure that this policy will generate employment in the nation? 

Well, the answer is very simple. The automobile industries in India provide employment to nearly 75 lakh people across the nation, be it directly or indirectly. With the introduction of this policy, the demand for new vehicles will surely rise by big numbers. Therefore, in order to meet the rising demand, these industries will employ more people and therefore the employment rate will rise, which was very much needed during these hard times when a lot of people have lost their jobs due to the COVID-19 pandemic and have run out of their savings.

Getting a slight off the topic, the minister in a recent report said that the ministry will launch electric tractors next month. This will be a great step towards the widespread introduction and acceptance of electric vehicles which will contribute to reducing the emission levels in the country.

The National Automobile Scrappage policy was officially introduced last week, and this policy will surely change India’s mobility and auto sector. This will contribute to phasing out the old and unfit vehicles from the country and will also boost the growth of Indian automobile industries, thereby promoting the make in India policy of the government.


Incentives are very important in order to ensure a widespread acceptance of a policy. According to the National Automobile Scrappage Policy, any individual who gives his/her old vehicle for scrappage will be provided with a certificate by the government of the nation. What is the benefit of this certificate, if you are wondering? Any person holding this certificate will not be charged any registration fee on the booking of any new vehicle. Not only this but the certificate holder will also be provided with some rebate on road tax. This, according to reports is one of the best parts of the policy and will surely ensure a widespread acceptance of this newly introduced policy.

The policy claims that the scrappage of the vehicle will not be decided by age. The emphasis will be completely given to the fitness test of the vehicle and it will be the mere decider whether the vehicle will get scrapped or not. It is said that this policy will attract an investment of Rs 10,000 crore from across the globe and will therefore create great employment prospects for the people of the country. The launch of this policy during the time when the country has been seeking a revival is not less than a master plan and will surely contribute to the revival of our nation’s economy.

Simerleen Kaur
Simerleen Kaur
Talk to me about economics, trade, and all things India.


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