What is the Vehicle Scrappage Policy in India?

Source: ey.com

Nirmala Sitharaman, India’s Finance Minister, declared a new vehicle scrappage policy during the Union Budget on 1st February 2021.

Later, on 18th March 2021, Nitin Gadkari, Minister for Road Transport and Highways, announced this scheme fully with all details. The idea behind this plan was to phase out vehicles that were older than 15-20 years. The Government took this step to bring down levels of urban pollution.

So, without further ado, let’s look into all the details of the vehicle scrappage policy in India.

The vehicle scrapping policy says that the Government will phase out commercial vehicles of more than 15 years and passenger vehicles of more than 20 years if they fail the emissions and fitness tests.

The idea behind this policy is to reduce pollution and boost the economy, which is suffering post-pandemic. Some also view it as a way to stimulate the Original Equipment Manufacturers’ demand.

Here are some significant highlights of the vehicle scrapping policy in India.

• There will be a system in place to scrap unfit vehicles.
• People should prepare to buy environmentally-friendly, safe, and technologically advanced vehicles in the future.
• Scrapping old and unfit vehicles will reduce pollution in specific locations.
• There will be certain benefits for vehicle owners who opt to do this.

The new vehicle scrappage policy has many benefits. Take a look at some of them!

• The scrapping of unfit vehicles will result in less air pollution and much better air quality.
• Vehicle owners may receive tax benefits to scrap old vehicles.
• It will lead to the reorganisation and growth of the recycling industry.
• The entire automobile sector will benefit as there will be a higher demand for jobs in scrapping centres.
• There will be a demand for new vehicles, as the old ones are scrapped.

Commercial and private vehicles that are over 15 years old must be tested for fitness while renewing the registration. If the vehicle seems unfit during the test, the owner shall have to repair it and apply for a re-test. Now, if the car fails this re-test, it will be declared an End-of-Life Vehicle (ELV). Then, it can be eligible for scrapping. 

The following additional eligibility criteria will be mandatory for cars to be scrapped: 

• Cars whose registration certificates have expired or about to be expired are eligible. 

• Those vehicles that fail in the fitness test at the registered inspection centre will be eligible.

• Irreparably damaged cars from accidents or natural calamities can be scrapped. 

• Impounded cars will also be eligible. 

Since there are different types of vehicles, vehicle scrapping laws cannot be the same for all classes. Hence, the Government has categorised them into different types.

• Commercial Vehicles: After 15 years have passed, commercial vehicles will be subject to a fitness test. If it passes this test, it will be allowed to ply. Otherwise, it cannot run and will be scrapped according to the rules specified for commercial vehicles.
• Government Vehicles: The Government will implement this policy from 1st April 2022. All State and Central government vehicles that are above 15 years of age will be scrapped.
• Private Vehicles: After 15 years, these vehicles will also undergo tests and will only be eligible to ply on road if they pass this fitness test.
• Vintage Vehicles: The vehicle scrappage policy in India will not apply to vintage vehicles as they are well maintained and driven less frequently.

There are many benefits for vehicle owners under the vehicle scrappage policy. They may receive a discount of 5% upon purchasing a new vehicle. All they have to do is show the certificate they received from scrappers. Hence, the overall vehicle scrappage policy is beneficial for owners as well as the environment.

If you are scrapping old vehicles to purchase a new one, you can receive up to 5% discount from the manufacturer. Moreover, there will be zero registration fee. Car owners can receive scrap value, which is about 4%-6% of the ex-showroom of the car. Apart from that, some state governments allow concession upto 25% (for non-transport vehicles) and upto 15% (for transport vehicles) on motor vehicle tax to such car owners. 

There are many benefits for vehicle owners under the vehicle scrappage policy. They may receive a discount of 5% upon purchasing a new vehicle. All they have to do is show the certificate they received from scrappers. Hence, the overall vehicle scrappage policy is beneficial for owners as well as the environment.