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Vehicle Scrappage Policy announced

March 25, 2021

By Lucy Rana and Rupin Chopra

On March 18, 2021 the Minister for Road Transport and Highways Mr. Nitin Gadkari announced the Vehicle Scrappage Policy. The said announcement was made by the Hon’ble Minister in the Parliament in the interest of a clean environment and to reduce population of old and defective vehicles, achieving reduction in vehicular air pollutants, improve road and vehicular safety, achieving better fuel efficiency and formalizing the informal vehicle scrapping industry.

While making the said announcement, Mr. Nitin Gadkari stated that “Older vehicles pollute the environment 10 to 12 times more than fit vehicles and pose a risk to road safety”. It was also stated that “in the interest of clean environment and rider and pedestrian safety, the Ministry of Road Transport and Highways is introducing the Voluntary Vehicle – Fleet Modernization Program (VVMP) or Vehicle Scrapping Policy which is aimed at creating an Eco-System for phasing out of unfit and polluting vehicles”.

It was outlined that the Eco-System is expected to attract additional investments of around Rs 10,000 Crores and 35 Thousand job opportunities.

Proposed features of Vehicle Scrappage Policy

  • Commercial Vehicles – It is proposed that commercial vehicles be de-registered after 15 years in case of failure to get the fitness certificate. Moreover increased fees for fitness certificate and fitness test maybe applicable for commercial vehicles 15 years onwards from the date of initial registration.
  • Private Vehicles – It is proposed that private vehicles be de-registe red after 20 years if found unfit or in case of failure to renew the registration certificate. Moreover increased fees for re-registration maybe applicable for private vehicles 15 years onwards from the date of initial registration.
  • Vehicles owned by Central/State Government – It is proposed that all vehicles of the Central Government, State Government, Municipal Corporation, 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.

It was further outlined that the scheme shall provide strong incentives to owners of old vehicles to scrap old and unfit vehicles through registered scrapping centers which shall provide the owners a scrapping certificate.

Proposed incentives under the Policy

  • Road Tax Rebate – The State Governments may be advised to offer a road tax rebate of up to 25% for personal vehicles and up to 15% for commercial vehicles.
  • Scrap Value – Scrap value for the old vehicles will be given by the scrapping centers which is proposed to be approximately 4 to 6 % of ex showroom price of new vehicle.
  • Waiver of Registration Fees – The registration fees may also be waived off for purchase of new vehicles against scrapping certificates.

The criteria for scrapping of vehicles shall be primarily based on the fitness of vehicles through Automated Fitness Centers in case of commercial vehicles and non-renewal of registration in case of private vehicles.

Integrated Scrapping Facilities

It was also announced by Mr. Nitin Gadkari that the Ministry of Road Transport and Highways will promote setting up of registered vehicle scrapping facilities across India and will encourage public and private participation of centers for opening up of such centers. Some of the identified places include Alang in Gujrat where it is being planned to develop a highly specialized center for scrapping, among many other potential centers, where different scrapping technologies can be synergized together.

Similarly the Ministry shall also promote setting up of Automated Fitness Centers by State Government, Private Sector, and Automobiles Sector etc. It is proposed that these centers may have adequate space for test lanes, IT Servers, parking and free movement of vehicles. To avoid any conflict of interest the operators of Automated Fitness Centers shall only provide testing facilities and shall not provide repairs/sales of spare services.

Proposed timelines for application of proposed Vehicle Scrapping Policy

S No. Rules Timeline
1 Rules for Fitness Test and Scrapping Centers October 01, 2021
2 Scrapping of Government and PSU Vehicles April 01, 2022
3 Mandatory Fitness Testing for Heavy Commercial Vehicles (HMV) April 01, 2023
4 Mandatory Fitness Testing (Phased Manner for other categories) June 01, 2024

The Ministry of Road Transport and Highways shall publish draft notifications in due course which shall be in the public domain for a period of 30 days to solicit comments and views of all stakeholders.

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