The Government of India has today officially launched its vehicle scrappage policy that’s aimed at phasing out unfit and polluting vehicles in an environment friendly manner. Constituting the infrastructure for this initiative will be Automated Testing Stations and Registered Vehicle Scrapping facilities across the country.
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."
He further added, "Vehicle scrapping will help phase out unfit and polluting vehicles in an environment friendly manner. Our aim is to create a viable #circulareconomy and bring value for all stakeholders while being environmentally responsible.”
Minister of Road Transport & Highways Nitin Gadkari said that the, “Automobile industry is the highest revenue-producing sector which also contributes to the employment of a large number of people in the country; Government is looking forward to provide all needed support to make this industry.”
- Multiple benefits for owners scrapping their vehicles
- Vehicle scrappage voluntary, but fitness test mandatory
- Automated testing centres, scrapping facilities to be set up
Vehicle Scrappage Policy: when will it be implemented?
The policy implementation will begin with heavy commercial vehicles, which will need to undergo mandatory fitness tests starting April 1, 2023. All other vehicles, including private ones, will be included in the mandatory fitness test criteria from June 1, 2024, in a phased manner.
Vehicle Scrappage Policy: when does the vehicle become eligible for scrapping?
The scrappage policy comes into effect after a vehicle’s registration cycle is over. In general, private passenger vehicles have a life of 15 years and commercial vehicles have a life of 10 years, after which they become much more polluting than when they were new.
That said, the new scrappage policy does not consider the age of the vehicle, but instead prioritises its fitness check result from the Automated Fitness Stations.
The most important thing to note is that the scrappage policy is a voluntary scheme. This is particularly important for well-maintained classic and vintage cars that need to be preserved for their heritage, and we have quite a lot of them here in India.
Vehicle Scrappage Policy: vehicle fitness test criteria
While vehicle scrapping is voluntary, the policy states that it is mandatory for all vehicles to undergo a fitness test once their registration cycle is over. If a vehicle fails the fitness test, it will not be issued a renewal certificate. In such cases, owners will be given the reasons for rejection and the opportunity to test twice more, failing which the vehicle will be mandatorily scrapped.
Even after a vehicle has passed the fitness test after the registration cycle is over, it will need to undergo fitness tests every five years to continue to run on the road.
Vehicle Scrappage Policy: what if your vehicle fails the fitness test?
As mentioned earlier, if a vehicle fails the fitness test, and the two allowed retests, it will not be issued a renewed registration certificate. An unregistered vehicle is practically illegal to run on the road.
Vehicle Scrappage Policy: registration renewal and green tax
Automated fitness centres across the country will check vehicles for emission of harmful gases and air-polluting particles, engine performance, brake test, and more. All vehicles passing the fitness test will be levied a green tax during registration renewal that will vary from state to state, and will also depend on fuel type, as well as the type of vehicle.
Greener vehicles like strong hybrids, EVs, and alternate-fuel models that use CNG, ethanol and LPG will be exempted altogether. Owners will also have to pay applicable fees for re-registration. The government hopes that all these additional costs will dissuade owners from holding on to their vehicles after they are past their prime.
Vehicle Scrappage Policy: how does it help the owner?
The government has outlined a slew of benefits that owners can avail on scrapping their old vehicles. Firstly, all owners who scrap their vehicles will be eligible for a scrap value of 4-6 percent of the ex-showroom price of the vehicle.
Secondly, manufacturers have also been advised to allow a discount of 5 percent on the purchase of a new vehicle against a scrappage certificate; this though will be hard to come by, given that manufacturers are already reeling under the burden of increasing commodity costs, especially steel. The scrappage incentive could be offset by a price hike, following which the discount could be offered.
The government is also allowing a rebate of up to 25 percent on your next vehicle’s road tax. Moreover, registration tax on your next car has also been completely waived off.
The new scrappage policy will also provide a great boost for the auto and metal industry, particularly from steel recycling. Getting rid of older vehicles will also boost sales of new models in the auto industry.