Nitin Gadkari Announces Incentives for Vehicle Scrapping

In a significant move aimed at accelerating India’s transition towards a sustainable and efficient automotive ecosystem, Union Minister for Road Transport and Highways, Nitin Gadkari, chaired a high-profile meeting at Bharat Mandapam. The gathering, attended by senior representatives of the Society of Indian Automobile Manufacturers (SIAM), focused on addressing critical challenges and opportunities within the automotive industry.

During the meeting, Gadkari emphasised the importance of modernising India's vehicle fleet by incentivising the scrapping of older vehicles. He proposed that carmakers offer substantial discounts on the purchase of new vehicles against the scrapping of older ones that come with a valid Certificate of Deposit (COD). This proposal is part of the government’s broader strategy to promote a Circular Economy and reduce pollution by taking outdated, high-emission vehicles off the roads.

Gadkari expressed satisfaction that many commercial and passenger vehicle manufacturers have agreed to participate in this initiative. The decision is a significant step forward in the implementation of India’s Vehicle Fleet Modernisation Programme, often referred to as the Voluntary Vehicle-Fleet Modernisation Program (V-VMP). The program is designed to encourage the replacement of older, polluting vehicles with cleaner, safer, and more fuel-efficient models.

The announcement is expected to have far-reaching consequences for both consumers and the automotive industry. For consumers, the scheme could make it financially viable to replace their old vehicles, which are often less fuel-efficient and more polluting, with newer, technologically advanced models. For manufacturers, this move could drive up demand for new vehicles, thereby boosting sales in a market that has been gradually recovering from the effects of the COVID-19 pandemic and economic slowdown.

Industry experts see this as a win-win situation. The scrapping of older vehicles not only contributes to a reduction in air pollution but also aligns with India’s long-term strategy of reducing its carbon footprint and meeting its commitments under the Paris Agreement. The government’s push for vehicle electrification and the promotion of green fuels are also expected to gain momentum as a result of this initiative.

Gadkari’s focus on the Circular Economy aligns with India’s broader sustainability objectives. By promoting the recycling of vehicle materials and encouraging the use of newer, more energy-efficient vehicles, the government aims to reduce the lifecycle environmental impact of the automotive sector. The program also fits into the government’s broader agenda of reducing vehicular emissions and improving road safety, given that older vehicles are statistically more likely to be involved in accidents due to outdated safety features and lower structural integrity.

The Society of Indian Automobile Manufacturers (SIAM), which represents the country’s leading automotive manufacturers, has welcomed the government’s initiative. SIAM officials indicated that several members have already begun exploring ways to implement the discount scheme efficiently while ensuring that the process of scrapping old vehicles remains straightforward for consumers.