Union Budget 2021 Vehicle Scrapping Policy
Passenger cars will have to undergo mandatory fitness testing from 1st June, 2024

The Vehicle Scrappage Policy will bring investments worth Rs. 10,000 crores, Prime Minister Narendra Modi claims

Prime Minister Narendra Modi officially launched the Vehicle Scrappage Policy or Voluntary Vehicle-Fleet Modernization Program (VVMP), in the country, recently.

The draft policy, which aims to phase out unfit passenger cars and commercial vehicles, was announced in February by Union Finance Minister Nirmala Sitharaman.

Announcing the Vehicle Scrappage Policy during the ‘Investors Summit for setting up Vehicle Scrapping Infrastructure’ in Gujarat on Friday, the Prime Minister said the initiative will bring in investments of around Rs. 10,000 crores.

He said 450-500 Automated Testing Stations (ATS) and 60-70 Registered Vehicle Scrapping Facilities (RVSF) will be set up across the country in the future.

Narendra Modi said people who scrap their vehicles will be provided with a certificate. The possessor of the certificate will not have to pay registration fee for a new vehicle and will be given some exemption on road tax, he added.

He also said that getting rid of old vehicles will provide some relief from the high risk of road of accidents and reduce the impact of pollution on the health of the citizenry.

According to the Vehicle Scrappage Policy, passenger cars need a valid fitness certificate for renewal of registration after 15 years, while commercial vehicles will undergo fitness test every 2 years for first 8 years and annually thereafter.

The government has announced that heavy commercial vehicles will be subjected to mandatory fitness testing from 1st April, 2023, while it is proposed that passenger vehicles and other categories of commercial vehicles should undergo the test from 1st June, 2024.

Voluntary Vehicle Scrappage Policy
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Vehicles which fail the automated fitness test (and retest and reinspection test) will be declared as ‘End of Life’ vehicles. These will then be sent to be scrapped and the scrapping centre will quote a value of approximately 4-6 percent of the ex-showroom price of a new vehicle.

The government is in the process of creating a single window clearance portal to process applications for ATS and RVSF within 60 days.

State governments have been asked to offer concession on motor vehicle tax of up to 15 percent for transport vehicles and up to 25 percent for non-transport vehicles.

In addition, the Union Road Transport Ministry has requested automobile companies to give a 5 percent discount to customers who have scrapped their old vehicles upon purchase of a new vehicle.

The government also wants to create an integrated scrapping hub in Alang, Gujarat (where ships are already being recycled) and aims to make India the scraping hub of Southeast Asia.