The Union Minister of Road Transport and Highways Nitin Gadkari said on February 8th that the scrappage policy for old vehicles is set to get cabinet approval within the approaching 15 days to a month.
Unsurprisingly, the move was met with backlash and there was some resistance from the steel ministry regarding the impact this policy would have on steel prices within the secondary market, according to sources. However, despite the setback, Gadkari said that clearance has been received from all quarters and a cabinet note is predicted in a month’s time.
A vehicle scrappage policy helps to put a shelf life (cap the age) of a car in terms of years and mileage. Industry stakeholders predict that if old vehicles are flushed out of the system, it’ll not only help reduce pollution but also induce demand for both new and used cars. In addition to this, the policy is also a welcome move for the country. “The scrappage policy also will reduce the country’s import of metals like steel, copper and aluminium,” he said while speaking at a Federation of Automobile Dealers’ Associations conference in Delhi.
It might be the way the auto industry recovers from the sharpest decline it has seen in decades as it works as an incentive to trigger demand. While it cannot be determined what changes this policy will bring, it is being heralded as a great hope for the automotive industry.
The approval is eagerly awaited to revive plummeting demand.