Vehicle Scrappage Policy

Funded by the government, this programme aims to scrap old vehicles and replace them with newer vehicles on Indian roads. The primary goal of the policy is to create a system for phasing out dangerous and polluting vehicles. 

This will help achieve a lesser amount of pollution and a reduced carbon footprint in the country. The Vehicle Scrappage Policy has several benefits like improved air quality, higher demand for safer and environmentally friendly automobiles like electric vehicles, opportunities in the metal recycling business, etc.

What is Vehicle Scrappage Policy? 

The Vehicle Scrappage Policy is an initiative funded by the government to replace outdated automobiles with new and modern vehicles. The policy was introduced on August 13, 2021. The goals of the scrappage policy are to: 

• Lower emissions

• Provide employment possibilities

• Increase the demand for new cars

   

In order to strengthen automotive sectors and reduce vehicular pollution, a number of nations have also implemented car scrappage programmes. Many developed and developing countries, including Germany, the US, Canada and China, are part of this league. 

As a result of this policy, major automobile manufacturers have built scrappage centers. These include:

• Mahindra & Mahindra's CERO

• Maruti Suzuki and Toyota's Maruti Suzuki Toyotsu 

This also helps the "Green India" initiative by making room for a fleet of cleaner automobiles.

According to the Indian government’s auto scrappage policy, the authorities will phase out the following vehicles:

• Any commercial vehicle and passenger car more than 15 and 20 years old, respectively

• A vehicle that fails the emissions and fitness tests 

The policy also mandates a standard operating procedure to dispose of unsuitable automobiles. 

Highlights of the Vehicle Scrappage Policy Announcement

This policy is not just expected to safeguard the environment from carbon emissions but also help the troubled Indian automobile sector. Even before the COVID-19 pandemic, the industry was witnessing disappointing trends in sales charts. 

The pandemic made the situation worse. As a response, the Government of India announced the vehicle scrap policy. The phasing out of older vehicles will generate a renewed demand for automobiles. 

Read below to learn about the key highlights of the vehicle scrapping policy:

1. The policy aims to phase out older automobiles to curb vehicular pollution

2. Ministry of Road Transport & Highways (MoRTH) is the nodal agency for its implementation and framing of rules and regulations.

3. The government will provide certain benefits to owners of scrapped vehicles

4. Owners of scrapped vehicles will move towards eco-friendly and modern automobiles. 

Benefits of Vehicle Scrappage Policy 

Now that we know about the scrappage policy, here are some of the potential benefits of this vehicle scrappage policy. The policy is expected to have positively affect the environment, economy, automobile owners and the auto industry. 

• Air pollution will reduce, and air quality will improve when unsuitable cars are scrapped. It is expected that more environment-friendly and less polluting cars (like electric cars) will take their place

• The age of more than 50 lakh private and commercial light motor vehicles is over 20 years old. As old cars are scrapped and replaced with new vehicles, there will be greater demand for new automobiles and boost the Indian auto industry

• Overall, the scrappage policy will help the economy by creating additional work opportunities. For instance, new automobile scrapping facilities will require a workforce, creating more employment opportunities

• New and technologically improved cars will be considerably safer. For instance, modern automobiles have better safety measures

In addition to all this, the owners of the scrapped vehicles will get a ton of benefits as well. Some examples of the benefits of vehicle scrappage policy for the owners are as follows: 

1. For commercial and personal automobiles, states may offer a road tax credit of up to 15% and 25%, respectively 

2. Owners of scrapped vehicles will be compensated with a scrap value anywhere between 4-6% of the ex-showroom cost of the new automobiles. 

3. There will not be any registration costs for a newly acquired car if the owner possesses a certificate. 

Latest Updates in Vehicle Scrappage Policy in 2023

According to a notification released by MoRTH in April 2022, the cost of renewing the registration of personal and commercial vehicles is now higher. For any vehicle older than 15 years, you may have to pay 8 times more to register an older car than the current rate.

There is a penalty of ₹300 each month if the registration renewal of personal automobiles is postponed. The fine for postponing commercial vehicle registration renewal is ₹500 per month, and the delay fee for the renewal of a fitness certificate is ₹50/day.

In all likelihood, mandatory testing for personal automobiles will begin in June 2024, albeit gradually. However, testing for commercial cars is anticipated to start in April 2023. 

Vehicle Categorisation for Scrapping Policy 

MORTH has classified vehicles into four categories in the scrap vehicle policy, which include:

• Commercial Vehicles

These vehicles will be put through a fitness test once 15 years have elapsed. They will be permitted to operate if they clear this test. If not, they will be scrapped in accordance with the guidelines for commercial vehicles.

• Government vehicles

Beginning on April 1, 2022, the government has put this policy into effect. All cars used by the state and Central governments older than 15 years will be subject to vehicle scrappage.

• Private Vehicles

These vehicles will be tested after 15 years and only be permitted to operate on the roads if they clear this fitness test.

• Vintage Vehicles

Due to their high maintenance and seldom use, vintage cars are exempt from India's policy on vehicle scrappage.

Fitness Test Under Scrappage Policy

The fitness test for vehicle scrappage will determine whether or not your vehicle can stay on the road. 

This test is basically a vehicle inspection that determines whether or not your vehicle is fit to drive on the road. The assessment will also determine whether or not the automobile is emitting pollutants beyond permissible limits. 

Not only that, but the automobile also has to pass a number of other technical evaluations, including the engine's performance, brakes, and many more. These fitness evaluations will be performed in automated facilities.

Fees for Renewing Vehicle Registration

The new fees for renewing vehicle registration, as informed by the MoRTH notification in 2022, are as follows: 

Disadvantages of Keeping Older Vehicles 

If you keep using an older vehicle, these are some disadvantages to note:

• The costs of renewing a fitness certificate for commercial and private vehicles may rise significantly. This will make it more expensive to maintain those automobiles that are older than 15 years.  

• States will also levy a green tax on top of the road charge that must be paid.

• Lastly, the owners of older vehicles will also miss out on the advancements made in the auto industry. Features like vehicle safety and fuel efficiency have all been improved over the years. 

Conclusion

The vehicle scrappage policy will undoubtedly lessen the rising pollution and promote safer automobiles on the road. Similar to how it is risky to use cars that are deemed unsuitable and unregistered by the policy, driving uninsured vehicles is also not advised. 

In the event of an accident, driving an uninsured vehicle might put you in financial difficulty and legal issues. So, instead of delaying, look through the car insurance plans on Bajaj Markets and get affordable premium rates right now.

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