Voluntary Vehicle Scrapping Policy
Holding onto old vehicles will become very tough in the coming years

The government has listed new details about its voluntary vehicle scrapping policy which was first announced in the Union Budget for 2021-22.

Union Minister for Road Transport and Highways, Nitin Gadkari, shared details of the scrapping policy in the Lok Sabha on Thursday, which included several incentives for people who voluntarily get rid of their old vehicles.

The policy, Gadkari claimed, will reduce pollution, improve fuel efficiency (of vehicles overall), and increase government’s revenue collection.

First up, fitness tests would be conducted on private vehicles that are 20 years old, of which there are 51 lakh examples, and on 15-year-old commercial vehicles, more than 17 lakh of which ply on Indian roads without a certificate of fitness.

The ones which fail the test will be labelled as “End of Life” vehicles and will be de-registered. The same would go for vehicles owned by governments, PSUs and autonomous bodies with the Central and State governments once they become 15 years old.

To discourage people from owning old vehicles that clear the fitness test, the government will also increase the fee for renewal of certificate of registration for private and commercial vehicles alike from 1st October this year (read article here).

Owners of “End of Life” vehicles will be encouraged to scrap them and will receive incentives for the same. The Road Transport Ministry as issued advisories to States to give up to 25 percent rebate in road tax for private vehicles and 15 percent rebate for commercial automobiles.

In addition, the government will not charge registration fee from individuals who have scrapped their old motor upon purchase of a new vehicle. Also, the Centre, Gadkari said, would issue an advisory to auto firms to offer 5 percent discount on the retail price of a new vehicle in the case the buyer produces a scrapping certificate.

These scrapping certificates will be provided by registered vehicle scrapping centres that would verify the ownership documents of old vehicles before crushing them.

To be implemented in a phased manner, the voluntary vehicle scrapping policy will kick-in for government-owned vehicles from 1st April, 2022, while compulsory fitness tests for commercial vehicles will begin on 1st April, 2023. Vehicles falling under other categories will be subjected to mandatory fitness tests from 1st June, 2024.

All said and done, the government has predicted that implementation of the voluntary vehicle scrapping policy will see the turnover of the automobile industry increase from Rs. 4.5 lakh crores to Rs. 10 lakh crores.

Moreover, the Union Transport minister claimed that prices of auto components will fall due to increased recycling of both metal and plastic parts once registered vehicle scrapping facilities are in place.

Voluntary Vehicle Scrapping Policy
Discounts in road tax, retail price of new vehicles to be offered