Vehicle Scrappage Policy

  • The vehicle scrappage policy aims to keep all polluted vehicle from plying on the road.
  • There are 51 lakh vehicles in India older than 20 years. 34 lakh vehicles which are more than 15 years old and around 17 lakh vehicles older than 15 years but do not have vehicle fitness certificate.
  • Old vehicles pollute air 10-12 times more compared to vehicles that are fit and also pose a risk to road safety.
  • After the implementation of this policy commercial and private vehicles will be de-registered after 15 and 20 years respectively and their re-registration will also be discouraged.
  • Further it will be a win-win proposal for the auto industry as scrapping old vehicles will lead to increased demand for new vehicles which will boost the auto sector.
  • The move will also benefit the centre and the state governments to garner more GST.


Key provisions of vehicle scrappage policy and its need in current scenario:
  • On shifting to newer vehicles from scrappage the fuel consumption gets lower, maintenance cost gets lower, safety for passengers is increased.
  • Also, the new vehicles are more environment friendly so there is a reduction in vehicular pollution.
  • Lower cost raw material will be obtained from scrap which can be used in other industries like steel and rare earth metals also.
  • This will align informal vehicle scrapping industry with formal sector.
  • It is estimated that this step will boost investments by about Rupees 10,000 crores and lead to 35000 more jobs.
  • The policy also has dual system of incentives and disincentives.


  • When older vehicles are scrapped then scrapping centre will offer a value for it which will be around 4 to 6 percent of old showroom price of the new vehicle.
  • State governments are also urged to offer rebate upto 25 percent in road tax for personal vehicles and upto 15 percent rebate for commercial vehicle.
  • Original equipment manufacturers of the auto industry are also nudged to provide minimum of 5 percent discount in the purchase of new vehicles against the scrapping certificates of old vehicles.
  • When the vehicle is scrapped, a scrapping certificate will be given and that will work as the waiver of the registration fees of the new vehicle.


There are three kinds of dis-incentives
  1. After 15 years when the personal vehicle is reregistered then there is a registration renewal fee that has to be paid which is proposed to increase
  2. Also there is a fitness testing fee that will increase and
  3. Fitness certification fee is also planned to be increased.


Exercise undertaken to determine the fitness of the vehicle on the road-
  • There is a plan to establish automated fitness centers and there are already about 7 fitness centers functional.
  • There will be automated tests on various aspects of vehicles which are laid down in the central motor vehicles rules.
  • Vehicles will be accounted for detailed automotive tests in the fitness center.
  • If a vehicle fails fitness tests then it will be recommended for scrapping.
  • There is a provision of appeal of retest but if the vehicle finally fails those fitness tests then it will be re-registered for scrapping.


The ways in which policy is going to contribute to the growth of the auto sector:
  • Disincentive component will levy more tax on older vehicles, re-registration and road tax and also fine imposed in terms of fitness certificate.  So people of older vehicles are somewhat motivated to shift out and give up old vehicles.
  • Positive incentives is a compilation of three components:
  1. OEMs are expected to pull in 5 percent of the price.
  2. State governments may contribute about 20 percent of road tax which comes to about 3 percent of toll price.
  3. Scrapping of vehicles amount for about 3 to 4 percent of the package which is 10-11 percent of the total vehicular cost.


Kind of job opportunities to be generated from this policy:

  • About 35000 jobs are expected to be generated in terms of setting up of new scrapping centers and automated fitness centers, automated industries will be boosted and the ancillary industries will developed due to this.
  • Apart from 6 billion dollar steel scrappage potential talked about through this policy.
  • Recycling of waste material and its utilization in packing industry will help in reusing waste and the manpower involved will also call for additional job opportunities.


Effect of policy in terms of curtailing vehicular pollution and increasing fuel efficiency:

  • The new vehicles tend to pollute about 10-12 times less and since there is a global climatic commitment to reduce the pollution to about 30-35 percent around 2030. So this policy can be a significant step in that direction.


Potential Challenges-

  • OEM and their dealers, government authorities and state government, Scrappage centers, RTOs and fitness centers must be synchronized.
  • Investment in scrappage center and fitness center is very high, so big market players are needed to be called for the purpose. Stakeholders including state governments, central government, various industries may find ways out to facilitate investment.
  • There should be a national common policy and it has to be PAN India approach.


Future Roadmap-

  • Rules are needed to be furnished for scrapping centers and fitness centers.
  • Issued rules for enhanced fees or re registration or fitness testing and fitness certification.
  • Govt vehicles which have completed 15 years of life will not be re-registered which are around 250000 vehicles so they will be scrapped.
  • Potential investors and big players are invited in this area with state Govt., MSTC with other central ministries to attract investment into this  two spheres of scrapping facilities and testing facilities.
  • All the  fitness and scrapping centres will be linked with Vahan portal. There will be seamless de registration through the portal itself so that there will be ease of scrapping.
  • The states have to be on board as they will be offering road tax rebate and land. For eg. Alang in Gujarat, which has a massive ship breaking industry is planned to have an integrated vehicle scrapping facility to upscale the economies in that particular area by bringing in government and maritime sector.


Privacy of the owner-

  • The results by the fitness testing centres will be masked on the lanes and they will go straight to central server to be communicated straight to vehicle owner.
  • So it amounts to be a very fair and transparent system automated  without any human intervention.
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