Is Your Vehicle Unfit To Be On The Road? Here's All About The New Vehicle Scrappage Policy

Prime Minister Narendra Modi launched the much awaited Vehicle Scrappage Policy in India on Friday at the Gujarat Investor Summit. While the new scrappage policy is voluntary, it would require mandatory fitness tests for vehicles after certain duration. We try to decode what exactly is the new scrappage policy and why industry is beaming with hope.

Vehicle Scrappage Policy explained

Much like the western countries, the scrappage policy comes into effect when a vehicle¡¯s registration is complete. In general, a passenger vehicle has a life of 15 years and a commercial vehicle has a life of 10 years, after which they become obsolete and also starts polluting the environment at a greater intensity than they would have been doing earlier.

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In western countries, these old vehicles are sent to scrapyards where they are dismantled and the steel used for making the body is crushed and recycled again. In India though, there was no such policy. Most of the vehicles either are on run currently polluting the environment or are lying at road sides.

Aim of the policy

As explained above, a vehicle should be scrapped at the end of its lifecycle so that they are stopped running on roads that will reduce air pollution. Also, getting off older vehicles will generate space for new vehicles, which will boost the sales in the otherwise battered and bruised Indian auto industry.

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Recommendations of the policy

The policy recommends ¡°fitness tests¡± for private and commercial vehicles that are more than 20 and 15 years old respectively. In the absence of a ¡°fitness certificate,¡± registration of such vehicles will be automatically cancelled. It further recommends mandatory scrapping of all government vehicles that are more than 15 years old but is applicable only on four-wheelers.

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The fitness tests will be done at government-certified fitness centres, appointments for which can be made online. Test reports will be generated in online mode. Also, scrappage can be done anywhere in the country, regardless of the place of vehicle registration.

Incentives offered by the scheme

The scheme also proposes several incentives which the owners can avail after being given a scrapping certificate. This includes the scrap value for the old vehicle, which is expected to be around 5-6% of the price of a new vehicle.

Additionally, a road tax rebate of up to 25% for new personal vehicles, and 15% for new commercial vehicles, as well as a 5% discount against the scrapping certificate, have also been proposed under the policy. The registration fees for the purchase of a new vehicle may also be waived upon getting the old vehicle scrapped.

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The policy will bring investments worth more than ?10,000 crore and create up to 50,000 jobs, Union transport minister Nitin Gadkari had said while announcing details of the policy, in March.

It will take time to implement the policy on the ground level as scrapping centres are not ready yet. ¡°From 2023 onwards, heavy commercial vehicles need to be scrapped if they do not conform to the fitness level prescribed under the rules. For personal vehicles, we plan to implement this from June 2024 onwards,¡± said Giridhar Aramane, secretary in the road transport and highways ministry.