Vehicle Scrappage Policy Announced in India [Details & List of Incentives]

Vehicle Scrappage Policy Announced in India: The much-talked-about Vehicle Scrappage Policy has been officially announced by the Minister of Road Transport and Highways, Nitin Gadkari, in Lok Sabha. In an effort to reduce pollution levels and encourage the adoption of electric vehicles, the government has promoted recent updates to the existing motor vehicle norms to allow scrapping of vehicles.

The Vehicle Scrappage Policy will get rid of old, polluting vehicles from the road. Adopted by a number of developed markets, a Vehicle Scrappage Policy is usually mandated by the government to accelerate the replacement of old, polluting vehicles by new vehicles.

To reduce the burden of old vehicles, the Indian government has been urging for Vehicle Scrappage Policy for a long time. As per one of the reports, the heavy and medium commercial vehicles segment faces a loss of 54% year by year, and with the implementation of this policy, the sector will benefit from it.

Vehicle Scrappage Policy Announced – Important Dates

As per the details available, the scrapping centres and fitness test rules will come into effect from 1st October 2021, while the scrapping of government and PSU vehicles above 15 years of age will be undertaken from 1st April 2022. Mandatory fitness testing for Heavy Commercial Vehicles (HCV) will be effective from 1st April 2023, while the mandatory fitness testing for other categories will come into effect in a phased manner from 1st June 2024.

Vehicle Scrappage Policy Announced – List of Incentives

Under the new scheme, incentives will be provided to owners of old vehicles to scrap their unfit vehicles via registered scrapping centres. Here is the list of some of the incentives outlined by the Road Transport Ministry:

• The state governments may be advised to offer a road-tax rebate of up to 25% for personal vehicles.
• Manufacturers will be advised to provide an additional discount of 5% on buying new vehicles against a scrapping certificate.
• The scrap value given by the scrapping centre is approximately 4-6% of the ex-showroom price of new vehicles.
• In addition, the Road Transport Ministry is also considering waiving registration fees of new vehicles against the scrapping certificate.

According to the details revealed by the Minister of Road Transport and Highways, Nitin Gadkari – “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”. Meanwhile, owners will be encouraged to voluntarily scrap the vehicles at the end-of-life instead of applying for a re-registration.”

“This policy is going to be a boon for the automobile sector, making it one of the most profitable sectors which in turn would generate huge employment,” Gadkari added further.

Reacting to the announcement, Vinkesh Gulati, President –  Federation of Automobile Dealers Associations (FADA) said, “Indian automobile industry has already upgraded to one of the most advanced emission standards. While new vehicles will be least polluting, vehicles that are old creates enormous pollution with the least safety standards will now be eligible for scrappage thus making roads safer and air cleaner. The guidelines and advice announced today are in the right direction and now, the State Governments and OEMs have to do their part to make it a success. It will also revive the ailing CV segment and in turn, will boost State exchequer’s revenue on the sale of new vehicles.”