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Vehicle Scrappage Policy in India

  • Author :
  • TATA AIG Team
  • Published on :
  • 07/12/2023

Early in April 2023, Union Road Transport and Highway Minister Nitin Gadkari said in his speech in the Parliament that around 11,025 vehicles (7,750 private and 3,275 government vehicles) were scrapped by the registered vehicle scrapping facility till March 31 2023.

This came into effect through the Voluntary Vehicle-Fleet Modernisation Programme. This programme, commonly referred to as 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.

Let us learn about bike or car scrappage policy in India.

What is Vehicle Scrappage 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.

The vehicle scrappage policy was introduced by the Prime Minister of India, Mr Narendra Modi, in Gujarat at an Investor Summit. The key highlights of the government scrap policy for vehicles are:

The policy aimed to scrap unfit cars and bikes

According to the Ministry of Road Transport and Highways (MoRTH), if you choose to scrap your old vehicle, you will be eligible for incentives.

The Vehicle Scrapping Policy 2023 will help in reducing pollution density.

The policy shall pave the way for safer, cleaner and technologically updated vehicles.

Categorisation of Vehicles for the Scrappage Policy

Since India has a vast variety of vehicles running on the roads, the rules applied to scrap these vehicles shall vary depending on the categorisation of the vehicles.

Private vehicles: All private cars must undergo a fitness test after 15 years of their registration. If the car clears the fitness test, renewal of registration can be done which is valid for 5 years.

Commercial vehicles: Commercial vehicles, like buses, trucks, etc., are eligible for fitness tests every two years for the first 8 years of registration and every one year after 8 years till the registration age of the vehicle reaches 15 years.

Government vehicles: All State and Central government vehicles that are above 15 years of age will be scrapped.

Vintage vehicles: Old car scrap policy does not apply to vintage vehicles as they are mostly well-maintained and driven less frequently.

If a vehicle fails the fitness test, it will be considered an End-of-Life Vehicle (ELV) if it fails the fitness test and will be scrapped.

Vehicle Scrappage Policy Timeline

Conditions Tentative Timeline
Declaring rules of vehicle fitness test 44470
Scrapping of (PSU) and government vehicles over 15 years old 44652
Fitness Testing of Heavy-Cost Vehicles 01 April 2023 (Now extended to 1 October 2024)
Fitness testing for other categories 45444

What are the RTO Rules under Car Scrapping Policy

If your vehicle fails the fitness test, here are some RTO rules to be followed for scrapping your vehicle.

Write a letter to the concerned RTO informing them about the scrapping of your vehicle.

Submit an affidavit to the RTO stating that the vehicle is clear from any pending traffic challan, court cases, insurance claims, loans, etc.

Simultaneously, contact an authorised scrap dealer and register for scrapping. When you go to the dealer, ensure you have all the necessary documents.

Your original vehicle documents must be surrendered, and the VIN plate must be cut out after scrapping.

The scrap dealer issues a ‘Certificate of Vehicle Scrapping’ and the same is uploaded on the VAHAN portal.

Additionally, you are required to submit a confirmation document to the RTO mentioning details of the scrap dealer and images of the scrapped vehicle.

Scrappage Policy Benefits

In addition to pollution control and improved safety on roads, the scrapping 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:

Avail discount: Under the new scrappage policy, vehicle manufacturers will give a discount for buying new vehicles against the scrappage certificate.

No registration fee: Individuals will not have to pay a registration fee for the purchase of new vehicles.

Rebate: 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 your vehicles to optimise safety on the roads.

Where To Get the Vehicle Tested or Scrapped?

If your vehicle is nearing its registration renewal, you have two options available under the Vehicle Scrappage Policy for private vehicles as well as others. You can either retain the vehicle or scrap it.

  • To retain the vehicle, visit the authorised Automated Testing Station (ATS)

  • To check the fitness of your vehicle, you can visit an Automated Testing Station (ATS), which uses mechanical equipment to automate the various tests. Click here to check the list of ATS centres.

  • To scrap the vehicle, visit the nearest Registered Vehicle Scrapping Facility (RVSF)

  • To scrap your vehicle, you can visit your nearest Registered Vehicle Scrapping Facility (RVSF); a few of them have already been operational. You can view the state-wise available RVSF here.

Vehicle Scrappage Policy India: Fees

For private vehicles (Light Motor Vehicle - Non-Transport)

Renewal of certificate of registration ₹ 5,000 (Renewal of registration after 15 years)
Fitness test for grant or renewal of fitness certificate ₹ 1,000 (automated testing)

For commercial vehicles

<td>Medium Goods /Passenger Vehicle</td>
<td>₹ 1,300 (automated testing)</td>
<td>Heavy Goods /Passenger Vehicle</td>
<td>₹ 1,500 (automated testing)</td>
<td>Medium Goods /Passenger Vehicle</td>
<td>₹ 10,000</td>
<td>Heavy Goods /Passenger Vehicle</td>
<td>₹ 12,500</td>
Fitness test for grant or renewal of fitness certificate Light  Motor Vehicle ₹ 1,000 (automated testing)
Grant or renewal of fitness certificate Light  Motor Vehicle ₹ 7,500

How Does Scrapping Affect Your Bike or Car Insurance?

Firstly, you must inform your insurer about your vehicle’s scrapping. Since your vehicle’s registration gets cancelled automatically upon scrapping, your two or four-wheeler insurance also gets cancelled. With no insurance, you are not obliged to pay premiums, but there are a few things you must know:

If you are eligible for any refund from your bike or car insurance provider for premiums paid before the scrapping, it will be calculated on a pro-rata basis.

Moreover, if you had raised a claim a year before your vehicle was put for scrap, the insurance policy will not be cancelled immediately; instead, it will be cancelled in the succeeding year.

When you plan to buy car insurance, ensure the policy secures your vehicle and yourself against unfortunate scenarios. However, for an informed purchase, it is always recommended to compare car insurance plans to find a suitable cover.

The four-wheeler insurance policy by Tata AIG comes with a choice of unique add-ons that strengthen the cover and protect riders against unpleasant situations.

Conclusion

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.

FAQS

What is the scrap value of a car after 15 years?

The scrap value is mandated to be around 4-6% of the ex-showroom price of the new vehicle.

What is the new Vehicle Scrapping Policy, 2023?

Vehicle Scrappage Policy India came into force in 2021. From April 1, 2023, fitness testing of Heavy Commercial Vehicles (HCVs) was scheduled to be conducted through Automated Testing Stations (ATSs), however, it has now extended to Oct 1, 2024.

What does a Fitness Test check in vehicle scrappage policy for private vehicles?

The fitness test determines whether the vehicle is fit to run on the roads and its impact on the environment.

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Disclaimer / TnC

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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