Vehicle Scrappage Policy in India 2022 - Explained

Vehicle Scrappage Policy In India: All You Need to Know

Scrappage Policy

One of the few things that have been discussed very fondly in the auto industry is the vehicle scrappage policy which was launched by PM Narendra Modi. Across the globe, various governments have implemented scrap policies for their citizens in collaboration with carmakers. India, however, has been rather late to the party, and it’s only now that a full-fledged scrappage scheme has been put into effect.

The new policy is being broadly seen as a move to help in improving the current unclear situation of old used cars that have surpassed their “shelf lives,” i.e., are older than 10-15 years. The vehicle scrapping policy in India targets phasing out older and unfit vehicles which are hazardous to the environment.

While launching the car scrapping policy, PM Modi had said that it would boost a circular economy which will not only be better for sustainable economic development but will also push for a greener world for tomorrow.

Objective of Vehicle Scrapping Policy in India

According to experts, the vehicle scrap policy will be fruitful for many sectors in the long run while acting as a custodian of the environment. The policy’s objective is to launch a fight against pollution by replacing old and unfit vehicles with new and clean vehicles.

An infrastructure will be built with automated testing of vehicles that have exhausted their registration period. The registration period for a passenger vehicle is 15 years as per the law, and for commercial vehicles, it stands at 10 years.

How Vehicle Scrapping Policy in India Will Work?

On the expiry of the registration of any vehicle, the owner can go to a government-authorized scrapping center and surrender the vehicle. The motor law of the nation says that the renewal of the fitness certificate ought to be done annually for commercial vehicles if they are older than eight years. For the initial eight years of the commercial vehicle, the vehicle has to pass the test every two years.

The fitness test judges the quality of the vehicle, whether the vehicle is fit enough to get on the roads, and also the environmental impact the vehicle causes. The vehicle has to undergo several tests in order to attain its certificate.

There are tests such as brake tests and engine performance, and many more. On the basis of clearing these tests, the vehicle is judged as fit or unfit. On passing the fitness test, the vehicle will have to undergo the same test after every five years as well. In order to renew the registration certificate after fifteen years, this fitness certificate would be necessary.

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According to the vehicle scrapping policy in India, the vehicles won’t just get scrapped on the basis of their age alone, they would be tested first by the automated testing centers. The vehicles that would be deemed unfit will have to get scrapped.

The scrapping of such vehicles is said to be done at various registered scrapping facilities, which will be available all over the country. These facilities would be technology-driven, and the vehicle will be labeled ‘unfit’ if it fails to qualify for the fitness test.

Benefits of Vehicle Scrapping Policy in India

Talking about the benefits of India’s scrappage policy, it comes with multiple incentives! For those opting to scrap their vehicles, the government has disclosed several offers.

For starters, they shall be rewarded with a scrap value that stands equal to about 4 to 6 percent of the ex-showroom price of the new vehicle they wish to purchase. The good news doesn’t end there, as the owners will be charged zero registration fees for their new vehicle if they carry and show their certificate of deposit. Additionally, vehicle manufacturers have also been advised to offer a 5 percent discount on the purchase of new vehicles when shown the certificate of deposit.

On top of that, the state governments have also been asked to offer concessions on motor vehicle tax. These concessions are believed to be up to 25 percent and 15 percent for non-commercial and commercial vehicles, respectively. 

However, scrappage policy benefits will also include a reduction in pollution. Once vehicles with high emissions are taken off the road, air pollution will come down. New car sales are also expected to see a rise after the removal of old vehicles from the road.

As new vehicles come with many more safety features than the older ones, the buyers will get a higher safety during travel. Furthermore, the vehicle scrappage centers set by the government will create huge employment opportunities.

Last but not the least, the scrap old cars will create a lot of raw materials through recycling, thereby supporting both raw and precious metal recycling industries.

The Effect of Vehicle Scrapping Policy in India

The policy will take effect differently for different types of vehicle owners. For private and personal vehicles over 20 years old that fail the automated fitness tests or do not have a renewed registration certificate, the date of “de-registration” is June 1, 2024. The commercial vehicles, on the other hand, will be de-registered from April 1, 2023. This is applicable to heavy commercial vehicles that are older than 15 years. 

In a bid to make it more efficient, the testing stations will be set up all across the country so that manual testing will be reduced to a bare necessary minimum. It will focus on getting things done as efficiently as one possibly can.

The Center has proposed to set up around 75 stations initially and then expand to more than 450-500 stations all over the country. It is plausible that private players might invest in helping set up the stations via PPP in partnership with state heads at the urging of the government.

In a similar fashion, registered vehicle scrapping facilities shall also be set up all over the country. Around 50-70 facilities are likely to pop up within the next five years. These registered facilities will promote the safe scrapping of vehicles and will be accessible to the public, enabling them to follow the policy without any issues.

Rules for scrapping an old car:

  • Write a letter to the RTO about your decision to scrap the vehicle.
  • Surrender the registration certificate (RC) and the chassis number by cutting the metal out of the chassis while scraping.
  • Submit an affidavit that the car is not under a loan, insurance claims, or pending case court.
  • The affidavit should even state that the car isn’t involved in any criminal activity.
  • The concerned insurance company should also be notified about the scrapping
  • Once the above steps have been followed, the RTO scrutinizes the submitted document and issues a no-objection certificate (NOC) from the police and the National Crime Records Bureau (NCRB). Once all the paperwork is cleared in accordance with the rules of the vehicle scrapping policy, the vehicle is deregistered by the RTO.
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