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Vehicle Scrappage Policy

  • Author :
  • TATA AIG Team
  • Published on :
  • 29/12/2021

The Voluntary Vehicle-Fleet Modernisation Programme or the scrappage policy of India is ushering in a new definition of owning automobiles in the country. This vehicle scrappage policy that was introduced in the parliament in March of 2021 is an endeavour to phase out old and debilitated vehicles. Experts believe that it is an important step for the economy as well as the environment. The old vehicle scrap policy is a responsible step toward a greener environment and aspires to create a circular economy that will drive value for each stakeholder involved. But before we discuss the benefits of the vehicle scrap policy, let us first understand what is scrap policy.

What is Scrap Policy?

The scrap policy in India is a programme funded by the government, and it has been introduced to replace old vehicles that are not in good condition with newer and modern alternatives. The primary purpose of the policy is to remove polluting vehicles from running on the roads and subsequently lower the country’s carbon footprint.

Under this old vehicle scrap policy, Heavy Commercial Vehicles (HCVs) such as bulldozers, cranes, road rollers, etc., will have to undergo a fitness test starting from April 1, 2023. These fitness tests for vehicles will exclusively be conducted at Automated Testing Stations (ATSs). For other Commercial Vehicles (CVs) and Private Vehicles (PVs), these fitness tests as ATSs will initiate from June 1, 2024. The vehicle scrap policy indicates that CVs that are older than 15 years and PVs that are older than 20 years will be scrapped if they don’t pass the fitness test. These vehicles will then be defined as End-of-Life Vehicles.

The Need for a Vehicle Scrappage Policy

Over the last few years, there has been a significant rise in vehicle ownership amongst people. Our country ranks seventh in automobile manufacturing, and most of the vehicles are used domestically. With regard to two-wheelers, India is the largest market globally. While this has culminated in an economic boom propagated by the automobile industry, it has also contributed significantly to the high pollution levels within the country.

Adding to this already grave issue is another problem: the rising number of road accidents in India. This problem is further aggravated with the consideration of the low safety features that are available in vehicles. While the government has been continually encouraging riders to invest in a bike insurance policy, several choose to neglect it. However, with mandatory third-party insurance for 2-wheeler, several individuals have been able to safeguard themselves from the financial burden of landing in an accident.

Finally, the rising number of automobiles in the country is causing a problem with the regulation of traffic on city roads. A more potent challenge, however, is to keep old vehicles from deteriorating the air quality owing to their poor engine capacities. To prevent this from happening, it is important to ply on roads to eliminate old vehicles and conduct pollution drives at short regular intervals. When people switch to newer vehicles, the emissions are limited, which also makes it a safe driving alternative.

What are the RTO Rules for Scrapping Two-Wheelers?

Under the two-wheeler scrap policy, it will be mandatory for old two-wheelers to undergo a fitness test to assess the vehicle’s durability. Here’s how the two-wheeler scrap policy will play out:

  • Fitness Test: Basis the RTO rules for scrapping two-wheelers, all two-wheelers that have crossed the age of 20 will have to undergo a fitness test. Vehicles that have been registered for use under commercial purposes push this limit five years behind. This means commercial use two-wheelers will have to get a fitness test if the vehicle is older than 15 years. If your vehicles are in appropriate condition, then you are provided with your renewed vehicle registration certificate that lasts for up to five years.

  • Computerised Fitness Test:Under the new scrappage policy, the fitness test that was conducted manually by an authorised professional at the RTO is soon to be conducted in a computerised manner. This automated fitness test service will have no human intervention and will be available under a Public-Private Partnership Model.

  • End of Life Certificate: In the event that your two-wheeler fails the fitness test, the vehicle is issued an end-of-life certificate. Once your vehicle receives this certificate, it will no longer be covered under your bike insurance policy as your vehicle is deemed unfit to travel on roads. These vehicles can then be scrapped at the respective facility.

The phasing out of old vehicles is a welcome step by the National Green Tribunal, but there is still a need to make the initiative concrete in various states and cities. When compared to developed nations, our vehicle usage years stand out. Where developed countries have an average vehicle use of seven years, in India, this number goes up to 20 years. Although newer vehicles with better engines and designs continue to be introduced, the emission levels from old vehicles remain a matter of concern.

Benefits and Incentives for Scrapping Old Vehicles

In addition to pollution control and improved safety on roads, the scrap policy in India comes with several benefits:

  • It will result in a boom in the automobile industry in the years to come
  • The policy will also help improve exports
  • There will be a likelier reduction in the import of crude oil
  • The sector will attract investments and create job opportunities for individuals
  • The aforementioned benefits for the country will be passed on to the customers in the form of the following incentives for scrapping old vehicles:
  • Under the new scrappage policy, vehicle manufacturers will give a discount for buying new vehicles against the scrappage certificate.
  • Individuals will not have to pay a registration fee for the purchase of new vehicles.
  • State departments will also provide a tax rebate which is 25% for PVs and 15% for CVs Considering the above-mentioned incentives, this is the time to replace old vehicles with new ones and have them secured with comprehensive insurance for 2-wheelers to optimise safety on the roads.

The Bottom Line

The scrappage policy is an important step toward a greener world as it focuses on gradually phasing out old vehicles that have high emissions and deteriorate air quality. This policy will not only help increase the demand for new vehicles but also ensure that the emission levels are better controlled. This will also lead to increased investment in insurance for 2-wheelers and 4-wheelers by riders and drivers.

When individuals invest in a comprehensive bike insurance policy, they can secure their vehicle and themselves against unfortunate scenarios. However, for an informed purchase, it is always recommended to compare two-wheeler insurance plans to find a suitable cover. The bike insurance policy by Tata AIG comes with a choice of unique add-ons that strengthen the cover and protect riders against unpleasant situations.

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Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.

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