Union Minister of Road Transport and Highways, Nitin Gadkari, announced on Tuesday that passenger and commercial vehicle manufacturers have agreed to offer discounts for the purchase of new vehicles against the scrapping of older ones of buyers with a valid Certificate of Deposit.

The decision was taken at a meeting with the Society of Indian Automobile Manufacturers Association (SIAM) CEOs chaired by the minister in which key issues confronting the auto sector were taken up for discussion.

Taking to X, Gadkari said, “I am pleased to report that, in response to my recommendation, several commercial and passenger vehicle manufacturers have agreed to offer discounts for the purchase of new vehicles against the scrapping of older vehicles with a valid Certificate of Deposit. This initiative will significantly advance our Circular Economy efforts, ensuring that cleaner, safer, and more efficient vehicles are on our roads.”

He congratulated the automobile manufacturers who took the initiative to participate in the Vehicle Fleet Modernisation Programme.

India auto majors are likely to offer 1.5-3.5 per cent discount to buyers who scrap their old vehicles to buy a new one.

The minister had last year said the country needs 1,000 vehicle scrapping centres and 400 automated fitness test centres.

Noting that the National Vehicle Scrappage Policy is a win-win for all stakeholders, the minister had said that India can be a scrapping hub in South Asia.

“Circular economy is very important and it is going to create jobs in the country,” Gadkari said.

Prime Minister Narendra Modi launched the National Vehicle Scrappage Policy in August 2021 and said it would help phase out unfit and polluting vehicles and also promote a circular economy.

The vehicle scrappage policy came into effect on April 1, 2022. Under the policy, the Centre said that the states and Union Territories (UTs) would provide up to 25 per cent tax rebate on road tax for vehicles that are purchased after scrapping old vehicles.

Announced in the Union Budget 2021-22, the policy provides for fitness tests of commercial vehicles after 15 years of purchase while in the case of personal vehicles the period has been fixed at 20 years.

The phasing out of old vehicles under the policy has been envisaged as they cause more pollution.