What is the vehicle scrappage policy and how does it affect you?

Organised scrapping of old vehicles in India is finally here. Find out when and how to bid adieu to your old car.

What is the vehicle scrappage policy and how does it affect you

Many of us would have travelled in cabs that looked like something that belongs in a museum rather than on the road. Soon, such cars are more likely to end up not in the museum, but a scrapyard. And from now on, we are unlikely to see a reign as long as the yellow Ambassador cabs had in Kolkata or the ‘kaali peeli’ Padminis had in Mumbai. 

What is the scrappage policy? 

In her 2021 budget speech, finance minister Nirmala Sitharaman outlined the government’s plans to introduce a vehicle scrappage policy India 2021. Recently, Union Road Transport Minister Nitin Gadkari expounded on these policies in further detail. 

As per the India vehicle scrappage policy, old and defective vehicles will be phased out. It will ensure less air pollution and increased fuel efficiency while reiterating India’s commitment to climate concerns. By pulling out unfit vehicles, the government can also ensure greater road safety. 

Organised scrapping will also streamline the supply of raw materials for the auto industry as well as the steel and electronics industry.

Which vehicles are to be scrapped?

The age of the vehicle is the parameter for the fitness test, but not necessarily for scrapping. Only a vehicle that has crossed its registration cycle and is rendered unfit in the fitness test will be scrapped as per the vehicle scrappage policy.

An unfit vehicle is classified as an End-of-Life Vehicle (ELV) if it fails the fitness test and retest. For this purpose, an unfit vehicle is one that fails a fitness test or is damaged by fire, riot, disaster, accident etc. to a degree that is beyond repair and use. 

From 1 June 2024, personal vehicles older than 20 years that have failed the fitness test or don’t have a valid registration certificate will be deregistered. From 1 April 2023, heavy commercial vehicles that are older than 15 years will be similarly deregistered.

Hybrid vehicles, electric vehicles, tractors, harvesters, and vehicles running on CNG, LPG and ethanol are exempted from the auto scrappage policy India 2021.

Related: Just bought a new car? Here’s what you need to do next!

Vehicle fitness inspection test

The scrappage of vehicles has been kept voluntary. This means that you don’t have to scrap a vehicle if you don’t want to. But beyond a point, there is not much else you can do with your car. 

Once the registration cycle (generally 15 years) of the car is over, the car will have to pass a fitness test. If the vehicle fails in the fitness test, the owner will be provided two more chances to pass. In case of subsequent failures, the vehicle will not be issued a renewed registration certificate and will be mandatorily scrapped as per the scrappage policy in India. 

Naturally, it is illegal to drive an unregistered vehicle on Indian roads. And even if the vehicle passes the fitness test, it will be subjected to subsequent fitness tests at the end of every five years. 

Testing and scrapping

Automated testing stations will be set up across the county, which will substitute manual testing stations. From an initial plan of 75 stations, nearly 500 stations are expected to be set up nationwide. A PPP model will also be explored to encourage private participation in the setting up of these stations. 

Among the incentives of the new vehicle scrappage policy, vehicle scrappage will open up a 5% rebate on new vehicle purchase, 25% discount on road tax, and full waiver on the vehicle registration fee. 

Related: Renewing your motor insurance? Here are some new rules you must know

Making old vehicle ownership expensive

States will be able to levy a green tax on old vehicles with the introduction of the old vehicle scrappage policy. The fee for re-registration of older vehicles will be increased, as would the renewal of fitness certification of commercial vehicles. Electric and alternative fuel-based vehicles will be exempted from this green tax.

The Government, along with the Ministry of Road Transport and Highways, can be expected to lay down the finer details of the vehicle scrappage policy India in the days to come. Presently, over 1 crore vehicles ply Indian roads without valid fitness certificates. With the full implementation of the vehicle scrappage policy, raw material costs can come down by as much as 40%. This can reduce component costs and make the Indian auto industry more competitive in the global market.


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