The vehicle scrappage policy, which was proposed by Union Finance Minister Nirmala Sitharaman during Union Budget speech 2021, aims to take vehicles older than 15-20 years off roads by encouraging owners to take fitness tests for their automobiles. Vehicles would undergo fitness tests in automated fitness centres after 20 years in case of personal vehicles and after 15 years in case of commercial vehicles. 

There are about 12 lakh commercial vehicles that are more than 15 years old and an effective scrappage policy will have the potential to support the sector over a three year period. It will be a big boost for the CV industry with volumes coming in for replacement equivalent to 36 per cent of annual sales. 

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