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The Vehicle Scrappage Policy is an initiative funded by the government to replace outdated automobiles with new and modern vehicles.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

• Lower emissions

• Provide employment possibilities

• Increase the demand for new cars
   

To strengthen automotive sectors and reduce vehicular pollution, several 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 centres. 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. 

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. 

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 a positive effect on the environment, economy, automobile owners and the auto industry. 

• Air pollution will be reduced, 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 of 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. 

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 under the guidelines for commercial vehicles.

• Government Vehicles

Beginning on 1st April 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.

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

This test is 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 some other technical evaluations, including the engine's performance, brakes, and many more. These fitness evaluations will be performed in automated facilities.

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