Vehicle Scrappage Policy – 101: All You Need To Know About Upgrading Your Car

01 Oct 2021

Car Insurance Article

As Indians, we tend to love our vehicles and hold on to them for years of end. While we may be sentimentally attached to our cars and our bikes, using the vehicle for years on end can adversely affect the environment and increase carbon emissions. To encourage us to get rid of the old vehicles when they are past their prime, the Indian government introduced the vehicle scrappage policy in the 2021 budget. The idea behind the policy is to reduce the impact of older vehicles and the pollution these vehicles contribute to the environment. Let us understand more about it in this article.

What is Vehicle Scrappage Policy?

The vehicle scrappage policy is an initiative to create new rules for rearing private and commercial vehicles in a way that creates a new ecosystem to get rid of polluting, unfit vehicles, slowly and steadily, from the central database of Indian vehicles. Vehicles will be scrapped at automated testing stations and government registered vehicle scrapping facilities across the country.

Under the vehicle scrap policy, private vehicles older than 20 years and commercial and government vehicles older than 15 years will be destroyed or scrapped. Per the policy, old vehicles need to undergo and pass a fitness test before re-registration, failing which they will be scrapped.

Highlights Of the Old Vehicle Scrappage Policy Announcement

  • Vehicle owners who opt for scrapping their vehicles will get a scrap value for the vehicle, which will be 4 to 6 % of the ex-showroom price of the new vehicle that they intend to purchase.
  • Owners who present the vehicle scrapping certificate when buying a new vehicle will be given waivers on new vehicle registration fees.
  • New vehicle owners will also get concessions of up to 25% for non-transport vehicles and up to 15% for transport vehicles on the motor vehicle tax.
  • The government has further advised vehicle manufacturers in India to offer a 5 % discount on purchasing a new vehicle to buyers who present the vehicle scrappage certificate.

The Categorisation of Vehicles Under the Scrappage Policy

  • Government Vehicles: The vehicles belonging to India’s Central and State Governments will be scrapped if they are more than 15 years old.
  • Commercial Vehicles: All commercial vehicles will have to undergo a fitness test upon completion of 15 years. If they pass the test, they will be renewed for 5 years; if they fail it, the vehicle will be scrapped.
  • Private Vehicles: All private vehicles will have to undergo a fitness test upon completion of 20 years. If they pass the test, they will be renewed for 5 years; if they fail it, the vehicle will be scrapped.
  • Vintage Vehicles: Vintage vehicles are those that are more than 50 years old. The government has exempted these vehicles under the auto scrappage policy for now.

Benefits of the Vehicle Scrappage Policy

The principal aim of the car scrap policy is to reduce the burden on the environment and boost the country’s economy. Here are some benefits.

  • Safeguards the environment by reducing air pollution significantly.
  • Creates more job opportunities in the automobile sector
  • Benefits the automobile sector through increased sales and profits
  • Vehicle owners get lots of benefits in the form of waivers and concessions for opting for scrappage

FAQs

What is the primary reason for introducing the vehicle scrap policy?

The primary reason for introducing the vehicle scrap policy is to reduce environmental pollution and provide growth opportunities to the automobile industry.

What does a fitness check comprise?

A fitness check comprises a thorough inspection of your car’s safety equipment, including seat belts, airbags, pollution tests, headlight alignment checks, indicators, brakes, engine components, rusting of parts, etc.

When will the policy come into effect?

Private vehicles that are more than 20 years will be de-registered from 1st June 2024, and Commercial vehicles that are more than 15 years from 1st April 2023.

Disclaimer: For more details on risk factors, terms & conditions please read sales brochure carefully before concluding a sale. *The discount amount will vary subject to vehicle specification and place of registration

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