Vehicle Scrappage Policy: All You Need To Know

The vehicle scrappage policy was announced in the parliament a few months ago and it is said to offer a much-needed boost for the Indian auto sector, which hasn't been performing optimally since the pandemic broke out. The outlook is that the scrappage policy could lead to a significant growth of 30 per cent in the Indian automobile industry. The scrappage policy will be implemented in a calibrated manner from April 2022. Here's everything you need to know about the Indian vehicle scrappage policy.

Also Read: India's Used Car Players Welcome Scrappage Policy

(Vehicle Scrappage Policy)

All vehicles will have to go through a mandatory fitness test once the registration period of the vehicle ends. Under the scrappage policy, a passenger vehicle's age has been restricted to 20 years, while that of commercial vehicles will be 15 years. Should the vehicle fail the fitness test, it will be deemed as an "end-of-life" vehicle. Meanwhile, owners will be encouraged to voluntarily scrap the vehicles at the end-of-life instead of applying for a re-registration. Driving vehicles that do not pass the automated fitness tests will attract huge penalties and will also be impounded.

Also Read: Nitin Gadkari Announces Scrappage Policy In Lok Sabha

(Government To Push Scrappage Policy from April 1, 2021 - Nitin Gadkari)

Union Minister Nitin Gadkari suggested that a scrap value of 4-6 per cent will be given to the owner, should they choose to scrap the vehicle. In addition, a rebate of up to 25 per cent will be given in road tax on buying a new vehicle. Vehicle manufacturers will be advised to give a five per cent discount to owners that show a scrapping certificate. The total benefits then will be about 10-15 per cent in exchange for the scrapped vehicle.

Also Read: Incentive Of 5 Per Cent On New Car Purchase For Scrapping Old Vehicles

(India will soon get 26 fitness and scrapping centres across the country)

The fitness test rules and scrapping centres will come into effect from October 1, 2021. The scrapping of government and PSU vehicles above 15 years of age will be undertaken from April 1, 2022. Mandatory fitness testing for heavy commercial vehicles will be effective from April 1, 2023. The mandatory fitness testing for other categories will come into effect in a phased manner from June 1, 2024. The government will be setting up 26 scrapping and fitness testing centres across India in various states. All 'end-of-life' vehicles will be tested for fitness and/or scrapped at these centres.

Also Read: Vehicle Scrappage Policy Approved 15-year Old Govt. & PSU Vehicles

(Vehicle manufacturers will be advised to give a five per cent discount to owners that show a scrapping certificate)

The Transport Ministry says that India has over 51 lakh light motor vehicles (LMVs) which are older than 20 years and 34 lakh LMVs which are older than 15 years. Similarly, there are over 17 lakh medium and heavy commercial vehicles (MHCVs) that are older than 15 years and don't have a valid fitness certificate. The base year taken is 1990. 

(Cars older than 20 years will be scrapped)

A recent proposal submitted by the Ministry of Road Transport and Highways says that the ministry plans to increase the re-registration cost by 25 times on vehicles older than 15 years. If approved, the fitness test cost of a commercial vehicle will be about Rs. 25,000, as opposed to just Rs. 200 per year. Similarly, the renewal of registration cost for cars will go up to Rs. 15,000 from the current charges of Rs. 600. The proposal also plans to increase the registration renewal fee for two and three-wheelers to around about Rs. 2,000-3,000, from the current cost of Rs. 300. In addition, the government is also planning to levy Green Tax at the time of renewal. The renewed registrations will remain valid for a period of five years.

All vehicles which are owned by the government and PSUs and are more than 15 years old, they will be scrapped beginning from April 1, 2021. This policy would apply to central and state government-owned vehicles.