Understanding India's vehicle scrappage policy 2021: Process and advantages

At its core, the vehicle scrappage policy in India aims to scrap vehicles that are old and unfit for the road. This program targets private cars over 20 years old and commercial vehicles over 15 years to make way for safer, greener options. By replacing these with newer vehicles, the policy seeks to reduce pollution and enhance road safety. Starting April 1, 2023, fitness testing for heavy commercial vehicles (HCVs) will be conducted through automated testing stations (ATSs). Other vehicles will follow suit by June 1, 2024.

The primary aim of the vehicle scrappage policy 2021 is to effectively identify and eliminate vehicles that are no longer roadworthy. This policy is designed to achieve a range of important objectives that collectively contribute to a healthier environment and a more robust economy. Here’s a more detailed overview of the goals it seeks to accomplish:

• The policy places a strong emphasis on improving the safety of passengers, other road users, and the overall infrastructure. By removing outdated and unsafe vehicles from the roads, we can create a safer driving environment for everyone.
• An important aspect of this vehicle scrappage policy is to bring organization and structure to the largely unregulated vehicle scrappage sector, ensuring that the process is transparent and accountable.
• Significantly reduce pollution levels by getting rid of vehicles that lack valid fitness certifications, thereby decreasing harmful emissions and enhancing air quality.
• Improving fuel efficiency is another critical goal, as the scrappage of older vehicles will lead to a fleet that consumes less fuel, ultimately lowering the costs associated with maintenance and operation for vehicle owners.
• The initiative aims to stimulate job creation within the automobile sector. By formalizing the scrappage process and encouraging recycling, new opportunities can arise in various areas of the industry.
• By facilitating the recycling of scrapped vehicles, the policy will provide a steady supply of low-cost raw materials for industries such as steel and electronics, supporting economic growth and sustainability.

Through these comprehensive measures, the Vehicle Scrappage Policy 2021 seeks not only to clean up the roads but also to foster a more sustainable and economically vibrant future.

This timeline highlights a phased approach to implementing the vehicle scrappage initiative, ensuring readiness and compliance at each stage.

The vehicle scrappage policy shines a light of hope for India's beleaguered automobile sector, which has faced challenges since late 2019. The Covid-19 pandemic further complicated matters, and while there was a slight boost in sales after festive season 2020, obstacles still persist. This new policy seeks to rejuvenate the industry by removing older vehicles from the roads and promoting the purchase of newer, more eco-friendly models.

Here are some essential aspects of the vehicle scrappage policy 2021 announcement:

• This initiative encourages people to choose eco-friendly, safe, and modern vehicles.
• The policy sets a plan for scrapping old vehicles in India.
• Vehicle owners can receive rewards for trading in their old cars.
• The Ministry of Road Transport and Highways (MoRTH) will provide clear guidelines for this process.
• Removing unfit vehicles is expected to reduce air pollution, though results may vary by area.

With this vehicle scrappage policy, there is renewed hope for the automobile industry and better environmental health.

Vintage cars, often older yet well-maintained, fall under a special category. These vehicles are not subject to the same scrappage rules due to their historical value and limited use, ensuring they remain a part of India's automotive heritage.

For private vehicle owners, the policy sets a 15-year threshold for fitness tests. Vehicles failing these tests will be scrapped, encouraging owners to invest in new, safer models. The removal of old cars improves urban traffic flow and reduces the risk of breakdowns.

The policy mandates that vehicles owned by the government over 15 years old will be scrapped. This move, effective from April 1, 2022, ensures that only modern and efficient vehicles remain in government fleets, enhancing public service reliability and reducing environmental impact.

Commercial vehicles, such as trucks and buses, will need to undergo fitness tests after 15 years. If deemed unfit, they will be scrapped according to the commercial vehicle scrappage policy. This ensures that goods and people are transported using vehicles that meet the latest safety and emission standards.

Here are some potential advantages of the vehicle scrappage policy for the economy, automotive industry, vehicle owners, and more:

Newer models come equipped with advanced safety technologies, providing better protection for passengers and lowering the chances of accidents. 

As older cars are taken off the road, the demand for new vehicles will surge, driving growth within the automotive sector. Over 5.1 million light motor vehicles, both personal and commercial, are over 20 years old and ready for an upgrade.

The new policy will invigorate the automotive industry, resulting in numerous job openings. For instance, the establishment of vehicle recycling centers will require a larger workforce. 

Removing outdated vehicles will cut down on air pollution, leading to healthier communities and a better environment. 

Vehicle owners could benefit from tax incentives when they choose to scrap their old cars, offering added encouragement to participate. 

This policy will revitalize the recycling sector, generating additional income from materials like steel and electronic components. 

Owners may secure good financial returns when scrapping their vehicles, especially for recyclable parts like batteries and tires.

With these benefits of the vehicle scrappage policy 2021, it aims to drive positive impact across multiple sectors, promoting a sustainable and economically vibrant future.

Essential components of the fitness test for old vehicles under the vehicle scrappage policy 2021

• To evaluate the vehicle's roadworthiness and environmental impact.

• The fitness test is similar to the pollution under control (PUC) test.
• Conducted through certified automated testing stations.

• The fitness test remains valid for five years.
• Retesting is mandatory after the validity period.

• Failure to pass the fitness test prohibits the renewal of the vehicle's registration.

• Older vehicles that pass the test may incur a green cess of 10 to 15% of the road tax, depending on the location.

• Owners of vehicles deemed unfit can either scrap the vehicle or make necessary repairs to meet the fitness standards.

Scrapping an old vehicle comes with its perks:

• Possible road tax concessions of up to 25% are available for non-transport vehicles, offering a significant opportunity for savings when purchasing a new vehicle.

• When you present a certificate of deposit, you can enjoy waived registration fees, simplifying the process and cutting down on upfront costs.

• Manufacturers often provide an additional discount of 5% on new vehicle purchases when you present a certificate of deposit, enhancing the overall value of your investment.

• New vehicle purchases come with enticing discounts ranging from 4% to 6%, giving you the chance to save on your next automotive investment.

If your vehicle's registration needs renewal, head to an ATS for a fitness check. For those ready to say goodbye to their old ride, visit an authorized scrapping facility. With ATSs becoming accessible through the Vahan database, the process is streamlined for convenience.

Holding onto an old vehicle might become costly:

• A green fee of 10-15% will be added to the road tax. 
• Higher re-registration charges will apply to private vehicles older than 15 years. 
• Increased fees for fitness tests and certificates for vehicles over 15 years old.

Renewing a vehicle's registration involves passing a fitness test. Here is the fee structure for the fitness test and renewal of vehicle registration charges for private vehicles that are over 15 years old:

Please note that fees for older vehicles are higher, encouraging a transition to newer models.

Fitness test (vehicles over 15 years old)

These revised fees reflect an encouragement to transition to more modern vehicles, ensuring compliance with the latest safety and emission standards.

Issuance or renewal of RC for vehicles over 15 years old

These adjustments are part of the broader initiative to ensure vehicles are safe, efficient, and environmentally friendly.

Reach out to a certified recycler via phone or their website. Arrange an appointment to either drive your vehicle to the scrapyard or request a pickup service from your location. Be aware that additional charges may apply for vehicle collection.

Gather all required documents including:

• A digital photograph of the owner or authorized person with the vehicle. 
• Cancelled cheque. 
• Identity proof (e.g., Passport, Driving license, Aadhaar, Voter ID, or Government-issued ID). 
• Vehicle owner’s permanent account number. 
• Original registration certificate. 
• Authorization letter if the vehicle is submitted by someone other than the owner. 
• Address proof of the vehicle owner (e.g., utility bills). 
• End-of-life vehicle (ELV) certificate from an automated testing station. 
• An owner’s declaration confirming the accuracy of the provided information.

The recycler begins by removing components like tires, the battery, and any CNG kits. Refrigerants from air conditioning units are safely handled. Fluids such as oil, brake fluid, and coolant are drained. Key parts including the exhaust, fuel tank, and interior elements like seats and dashboards are extracted. Finally, the vehicle’s chassis is disassembled, and the VIN plate is removed.

With various components carefully removed, the vehicle’s body shell is positioned into a large crusher designed for high efficiency. The crushing process reduces the shell to manageable pieces, and the resulting steel is meticulously prepared for smelting, where it will be melted down for reuse. Meanwhile, the extracted parts such as engines, transmissions, and electronics are sorted into categories for resale or further processing, depending on their condition and market demand. Throughout this entire operation, stringent environmental standards are upheld to ensure that no harmful pollutants escape into the atmosphere or surrounding areas, safeguarding the ecosystem and promoting sustainable practices in the automotive recycling industry.

Post-scrapping, the recycler issues a ‘certificate of destruction’. This document is crucial for de-registering the vehicle at your local regional transport office. Payment for scrap value is made digitally or by cheque. The certificate can be used to receive discounts on a new vehicle, including concessions on road tax and registration fees.

Here are the key RTO guidelines for scrapping vehicles in India:

• Vehicle owners need to submit a letter to the relevant RTO expressing their intention to scrap the car.

• An affidavit must accompany the letter, confirming that the vehicle is free from bank loans, insurance claims, pending traffic fines, or legal issues. It should also declare that the vehicle has not been involved in any thefts.

• The original vehicle documents must be surrendered, and the VIN plate will be removed once the car is scrapped. The RTO will keep these documents for record-keeping.

• A confirmation from the scrap yard on official letterhead, including its complete address, is necessary. Additionally, photos of the scrapped vehicle must be submitted to the RTO as part of the process.

Vehicle owners must adhere to the following RTO guidelines to successfully deregister their old vehicles:

• Notify the relevant RTO about the intent to scrap the vehicle.
• Surrender the vehicle registration certificate and remove the chassis number plate during the scrapping process.
• Provide the confirmation document issued by the vehicle scrap dealer.
• Include an affidavit with the deregistration application, stating that the vehicle is free from loans, insurance claims, or pending legal issues.
• The RTO will verify these documents and obtain diligence reports from the traffic police and the National Crime Records Bureau.
• The RTO will cross-check the vehicle's records in their database concerning its sale.

Upon verification and approval of all required documents, the RTO will initiate the deregistration process for the old vehicle.

Vehicles over 15 years old for commercial and 20 years for private use, failing the fitness test, qualify for scrappage.

Yes, owners can repair and retest their vehicles if they fail the fitness test.

Yes, vintage vehicles are exempt due to their historical significance.

When you scrap your car, you can expect to receive around 4% to 6% of its original ex-showroom price.

Disclaimer:  The details provided are for informational purposes only. Seek professional guidance for any decisions.

ARN: Zuno/Blog/DM/Understanding India's vehicle scrappage policy 2021: Process and advantages/11/24/02.

All Rights Reserved.