India's automakers have agreed to offer discounts on new vehicles against scrapping of older ones with a valid certificate of deposit, Union Transport Minister Nitin Gadkari said.
"This will significantly advance our circular economy efforts, ensuring that cleaner, safer, and more efficient vehicles are on our roads," the minister tweeted. The decision was taken during a meeting of the Society of Indian Automobile Manufacturers at the Bharat Mandapam in New Delhi.
According to the official statement cited by the Press Trust of India, the quantum of the discount ranges from 1.5 to 3% across vehicle types. Companies can voluntarily offer additional discounts on identified models.
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"Details of the scrapped vehicle will be linked in the Vahan system," as per the statement "As the vehicle is not getting exchanged but only scrapped, hence between exchange and scrap discount, only scrappage discount will be applicable."
Commercial vehicle manufacturers are willing to offer discounts for a limited period of two years and passenger vehicle manufacturers are willing to offer discounts for a limited period of one year.
In August 2021, India introduced the National Vehicle Scrappage Policy to phase out old and polluting vehicles. As part of this, states provide a 25% road tax rebate on vehicles purchased after scrapping older vehicles.
Under the vehicle scrappage policy, a passenger vehicle has a lifespan of 20 years, and commercial vehicles 15 years, subject to a fitness test.
According to the statement, carmakers will offer a discount of 1.5% of the ex-showroom price of a new car or Rs 20,000, whichever is less, against the passenger vehicle scrapped by the owner in the last six months.
Commercial vehicle makers will offer a discount equivalent to 3% of the ex-showroom price for a cargo vehicle of more than 3.5 tonnes.
"Discount to be offered to a person buying a vehicle against the Traded Certificate of Deposit of a scrapped commercial vehicle would be equal to 2.75% of the ex-showroom price for scrapping a commercial cargo vehicle with more than 3.5 tonnes gross vehicle weight," the statement read.
This scheme may also be considered for buses and vans as well.
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