Vehicle Scrappage Policy 2021: Here's Everything You Need To Know

On February 1, 2021, Finance Minister Nirmala Sitharaman had stated in her annual budget speech, ¡°the government will announce a voluntary vehicle scrapping policy to phase out old and unfit vehicles.¡±

Now, Union Road Transport Minister Nitin Gadkari has launched policies on phasing out old and defective vehicles. This is being done in order to achieve goals like reducing air pollution, fulfilling India's climate commitments, improving road and vehicular safety, better fuel efficiency and increasing the availability of low-cost raw materials for the auto, steel and electronics industry.

ET (Minister for Road Transport & Highways Nitin Gadkari)

Several countries such as the US, Canada, Germany and China have introduced vehicle scrappage policies to boost their automotive industries and keep vehicular pollution in check. The US has implemented the Car Allowance Rebate System (CARS), also known as Cash for Clunkers programme - it offers credit incentives on scrapping older vehicles and replacing them with new and more fuel-efficient vehicles.

Now, according to the new Indian policies, private vehicles will be de-registered after 20 years if found unfit or in case of failure to renew registration. From the date of original registration, enhanced re-registration will be applicable on private vehicles from the 15th year.

Gadkari added that under the new vehicle scrappage policy, owners of old vehicles will get strong incentives to get rid of old and unfit vehicles.

Quartz

Vehicles belonging to the central government, state government, municipal corporations, Panchayats, State Transport Undertakings, Public Sector Undertakings and autonomous bodies with the Union and state governments may be de-registered and scrapped after 15 years from the date of registration.

"In the interest of a clean environment and rider and pedestrian safety, the Ministry of Road Transport and Highways is introducing the 'Voluntary Vehicle-Fleet Modernization Program' or 'Vehicle Scrapping Policy', which is aimed at creating an eco-system for phasing out of unfit and polluting vehicles," said the Union Minister in a suo-moto statement."

"The Ministry shall promote setting up of AFCs on a PPP model by state government, private sector, automobile companies etc.," he said.

The tentative date for scrappage of government and PSUs vehicles above 15 years of age is April 1, 2022.

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There are advantages to scrapping old vehicles and buying new ones - Vehicle manufacturers may give up to 5% discount for buying new vehicles, a state may give up to 25 per cent and 15 per cent rebate on road tax for personal and commercial vehicles, zero new registration for a fee, reduced maintenance cost and many more!

The disadvantages of keeping old vehicles are: states may levy an additional 'Green Tax' Hike in re-registration fee for private vehicles, increase in the renewal of fitness certification for commercial vehicles, automatic de-registration of unfit vehicles etc.

Strong hybrids, electric vehicles, agricultural equipment like tractors and harvesters, vehicles using alternative fuels such as CNG, ethanol and LPG would be exempted from the vehicle scrappage policy.

The appointments will be generated online. The Ministry of Road Transport and Highways (MORTH) has not specified any time, but has given the following tentative timelines:

October 1, 2021: Rules for fitness scrapping centres will be released

April 1, 2022: Fitness testing for government and public-sector undertaking (PSU) vehicles

April 1, 2023: Fitness testing for heavy commercial vehicles

June 1, 2024: Fitness test rules to be rolled out for other categories

ET

In order for this policy to work, the Indian government needs to establish an infrastructure for testing and scrapping centres rapidly across the country. Presently, India has seven automated fitness test centres and two authorised scrappage centres. As it is, discarding old vehicles is quite difficult for owners so the lack of infrastructure might be discouraging for them to get rid of unfit vehicles as well.

The Society of Indian Automobile Manufacturers (SIAM) has said that it will work with the government to create an infrastructure for vehicle testing and scrappage centres across the country.