Centre and states will scrap 9 lakh govt vehicles; Center would support financially

Finance Minister Nirmala Sitharaman has announced the Budget 2023 in India, with a renewed emphasis on ‘green mobility’. The announcement comes after Union Transport Minister Nitin Gadkari’s statement that 9,00,000 vehicles owned by the central and state governments will be scrapped soon, starting April 1, 2023.

Vehicle Scrappage Policy

The central government will allocate more funds towards scrapping of old vehicles, including ambulances, and support state governments in their efforts to do the same. The move is expected to benefit India’s automobile and electric vehicle manufacturers, as a good number of the replacements will likely be electric vehicles. The central government has also encouraged the use of alternatives to internal combustion engines, such as ethanol, methanol, bio-LNG, and bio-CNG.

Tax Rebates

The 2022 scrappage policy stated that states and Union Territories would provide up to 25% tax rebates on road tax for vehicles purchased after scrapping old vehicles. However, this was not put into action by states as it would have resulted in the states losing out on tax revenue. It is currently unclear if the states will receive financial help to implement the tax rebates.

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Renewed Emphasis on Green Mobility

The Budget 2023 has a renewed emphasis on ‘green mobility’, with the central government allocating funds for the scrapping of central government vehicles and supporting states financially. The government’s push towards using alternatives to internal combustion engines and encouraging the use of electric vehicles aligns with the global trend towards sustainable transportation.

The Finance Minister’s announcement of the Budget 2023 in India has significant implications for the country’s automobile and electric vehicle industries. The move towards scrapping old vehicles and encouraging the use of alternatives to internal combustion engines is a step towards a greener and more sustainable future. It would also make India’s vehicle manufacturers – especially EV – manufacturers very happy indeed.

The reaction of the state governments is yet to be seen, but the central government’s support in the form of funds and financial assistance could make the implementation of the vehicle scrappage policy and tax rebates a reality.

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