What the New Vehicle Scrappage Policy Means for You

The new Vehicle Scrappage Policy is being touted as a step to boost the automobile sector.

(This story was first published on 19 March 2021. It is being reposted from The Quint’s archives in the light of PM Narendra Modi launching the National Automobile Scrappage Policy on Friday, 13 August.)

Union Minister for Road Transport and Highways Nitin Gadkari on Thursday, 18 March, spoke about the new draft notification that will force owners of vehicles to pay hefty fee for re-registration of their vehicles.

The policy has been proposed to weed out the older feet of vehicles in India to reduce air pollution by 25-30 percent and help improve road safety as well. The vehicle scrappage policy was first proposed by Union Finance Minister Nirmala Sitharaman during Budget 2021. The policy is being touted as a step to boost the automobile sector.

“Once it is implemented, the scrappage policy will make India the world’s largest automobile hub in five years,” Gadkari said in the Parliament.

What Is the New Policy?

Personal vehicles older than 20 years and commercial vehicles older than 15 years will have to undergo a fitness test at the government registered ‘Automated Fitness Centres’.

Vehicles that fail to pass the test will be declared as ‘end-of-life vehicles’, which would mean that the vehicle would have to be recycled. This will pave the way for older vehicles to be scrapped. In case, the vehicles pass the test, owners will have to pay a hefty fee for re-registration.

According to the new policy, the re-registration fee would be hiked around eight times for personal vehicles, and around 20 times for commercial vehicles.

What Are Automated Fitness Centres?

Every vehicle will have to go under mandatory fitness test at the automated fitness centres. The government aims to have at least 718 centres across the country. These centres will test the vehicle’s emission, and braking and other safety components as prescribed by Central Motor Vehicle Rules, 1989.

Appointments to these centres will have to be booked online and the fitness report will be electronically generated.

What Is the Change in Fee Structure?

Government has increased the fee for renewal and grant of fitness certificate of older vehicles up to 20 times. Here is the new fee structure for personal vehicles older than 15 years:

• Two-wheelers – Rs 1,000
• Three wheeler/quadricycles – Rs 3,500
• Cars – Rs 7,500

For commercial vehicles:

• Passenger motor vehicles – Rs 10,000
• Heavy goods/large motor vehicles – Rs 12,500

If a fitness certificate is sought after the expiry date, an additional charge of Rs 50 per day will be levied.

How Will You Benefit?

In case you decide to scrap your old vehicle at the registered scrapping centres, you will get approximately 4-6 percent of the value of the vehicle’s ex-showroom price. The ex-showroom price is the cost of vehicle, excluding the charges paid for registering the vehicle at RTO and insurance.

Moreover, if you buy a new vehicle you will be given a flat 5 percent discount on presenting a scrapping certificate. Registration fees will also be waived on the purchase of a new vehicle.

How to Obtain a Scrapping Certificate?

Old vehicle owners will be able to formally scrap their registered vehicles at the automated scrapping centres. These centres will be linked with the Vahan database of the transport ministry.

After you scrap your vehicle with the government registered agency, you will be provided with the scrapping certificate. You will then be eligible for the benefits proposed under the scheme.

Dates for Scrappage Policy Implementation

Tentative timeline for the new rules:

• Rules for fitness tests and government scrapping centres to come into effect – 1 October 2021
• Scrapping of government and PSU vehicles above 15 years of age to start – 1 April 2022
• Fitness testing for heavy commercial vehicles – 1 April 2023