Government of India announces vehicle scrappage policy

Representational Purpose

The Union Minister of Road Transport and Highways, Nitin Gadkari, has revealed more details on the vehicle scrappage policy that was announced last month by the finance minister as part of the Union Budget 2021-2022. The following are the highlights —

  • Fitness certificates will be mandatory for heavy commercial vehicles from April 1, 2023; it’ll be mandated for other categories in a phased manner from June 1, 2024.
  • Failure to obtain the fitness certificate for a 20-year old personal vehicle and a 15-year old commercial vehicle will result in de-registration; the vehicle will be declared as ‘End of Life Vehicle’.
  • Instead of renewing the RC, owners can choose to scrap their old vehicles and obtain incentives proposed under the scheme.
  • Incentives include a scrap value of 4-6% of the ex-showroom price of a new vehicle, and a 5% discount from OEMs on a new vehicle against the scrapping certificate; the latter is an advisory and not a mandate.
  • The state governments can offer a road tax rebate of up to 25% for personal vehicles and up to 15% for commercial vehicles. Again, this is just an advisory and not a mandate.
  • Prices for the renewal of registration certificates will go up from October 1, 2021. A 15-year old personal car will cost INR 5,000, which is over 8 times more compared to the current INR 600 renewal charges.

Download the media handout here to learn more.

There are many questions that need to be answered, but obviously, the automotive industry is happy and has welcomed the policy. FADA (Federation of Automobile Dealers Associations) President Vinkesh Gulati had the following to say –

The guidelines and advice announced today are in the right direction and now, the State Governments and OEMs have to do their part to make it a success. Scrappage value of the vehicle in range of 4-6% of the ex-showroom price, a rebate of up to 25% for PV and 15% for CV by State Governments on Road Tax, 5% discount from OEM’s on new vehicle and registration fee being waived off will definitely help to excite the customer and motivate him/her to scrap their old vehicle. It will also revive the ailing CV segment and in turn will boost the State exchequer’s revenue on the sale of new vehicles.

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