Government announces vehicle scrappage policy - all you need to know

Aug 14, 2021 2 min read
Government announces vehicle scrappage policy - all you need to know

PM Modi has announced the vehicle scrappage policy and its implementation from 2023.

The central government unveiled the long-awaited car scrappage policy on Thursday. Union transport minister Nitin Gadkari described the measure as a "win-win" for everyone, noting that it would decrease pollution and improve road safety.

According to Gadkari, commercial cars will deregister after 15 years without a fitness certificate. He said that private vehicles will deregister after twenty years if declared unfit or if registration certificates are not renewed.

The Prime Minister of India, Narendra Modi, had tweeted, “The launch of Vehicle Scrappage Policy today is a significant milestone in India’s development journey. The Investor Summit in Gujarat for setting up vehicle scrapping infrastructure opens a new range of possibilities. I would request our youth & start-ups to join this programme."

The move is being regarded as a significant step toward reviving India's automotive industry, which is suffering from the negative effect of the COVID-19 pandemic.

When vehicle scrappage policy is scheduled to become functional?

Beginning April 1, 2023, heavy commercial vehicles will require to pass obligatory fitness testing. From June 1, 2024, all other vehicles, including private cars, will incorporate into the required fitness test criteria.

The following summarizes the policy's provisions:

Private cars will be subject to a fitness test at government-certified fitness centers. Owners may scrap their vehicles regardless of their registration location in the country.

The policy does not apply to vintage cars.

By the new rules, appointments for fitness centers may schedule online. Electronic records of tests will produce.

Vehicles will deregister if they do not get fitness certification or found to be unfit.

Additionally, the government proposed that all vehicles registered to the state transportation undertakings, state governments, central government, municipal corporations, public sector undertakings, panchayats, and autonomous bodies with the Union and state governments scrapped 15 years after registration. April 1, 2022, is the projected deadline for scrapping government and PSU cars above 15 years.

After receiving a scrapping certificate, owners will be able to receive the scheme's benefits.

Incentives include scrap value for the old car, typically 4-6 percent of the new vehicle's ex-showroom price.

State governments may encourage to provide a 25% road tax refund on personal cars and a 15% road tax rebate on commercial vehicles.

Manufacturers of new cars are also urged to provide a 5% discount on new car purchases.

Registration cost may also eliminate when purchasing a new car.

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