What is the vehicle scrappage policy?

The Vehicle Scrappage Policy India (officially known as the Voluntary Vehicle-Fleet Modernisation Program) is a government initiative introduced by the Ministry of Road Transport and Highways (MoRTH) to phase out unfit, old, and environmentally harmful vehicles. Under the Vehicle Scrapping Policy, eligibility is determined by automated fitness testing rather than age alone. Private vehicles older than 20 years and commercial vehicles older than 15 years must undergo mandatory tests. Vehicles that fail tests or lack registration renewals are designated as End-of-Life Vehicles (ELVs) and must be scrapped through a Registered Vehicle Scrapping Facility (RVSF). Owners who opt into the Car Scrappage Policy gain major Vehicle Scrappage Benefits, including scrap value payouts, road tax concessions, registration fee waivers, and discounts on new vehicle purchases.

What is the Vehicle Scrappage Policy?

The Vehicle Scrappage Policy India is a national framework designed to create a circular automotive economy by retiring unsafe and high-emitting motor vehicles. Rather than enforcing an absolute ban based purely on age, the Vehicle Scrapping Policy relies on automated fitness tests conducted at certified Automated Testing Stations (ATS).

If an old car passes its mandatory fitness test, it can remain on the road after paying updated renewal and green tax fees. However, if it fails the test or remains un-renewed, it is tagged as an End-of-Life Vehicle (ELV) in the national VAHAN database and directed for systematic recycling at an RVSF.

Why was the Vehicle Scrappage Policy introduced?

The government rolled out the Vehicle Scrapping Policy to solve several critical challenges in transportation, public health, and environmental sustainability:

• Emissions reduction: Older vehicles produce significantly higher tailpipe pollutants compared to BS-VI compliant cars. Removing older models improves overall air quality.
• Improved road safety: Many older cars lack modern safety essentials like ABS, airbags, and structural crumple zones.
• Formalising scrap recycling: Moving vehicle disposal from informal, unorganised scrap yards into regulated, eco-friendly Registered Vehicle Scrapping Facilities (RVSFs).
• Raw material recovery: Dismantling vehicles systematically recovers steel, aluminum, copper, and rubber, lowering raw material import costs for domestic manufacturers.
• Economic stimulus: Encouraging vehicle replacement boosts demand for new automobiles, generating industrial growth and new jobs in certified recycling plants.

Which vehicles are covered?

The Car Scrappage Policy covers all motor vehicles operating on Indian roads, but applies specific rules depending on whether the vehicle is commercial, personal, or government-owned:

Eligibility criteria for vehicle scrappage

A vehicle becomes eligible for scrapping under any of the following conditions:

• Fitness test failure: Failing the mandatory automated fitness or emission test at a certified station, and failing a subsequent re-test.
• Expired registration: Non-renewal of the Registration Certificate (RC) after reaching the threshold age.
• Severe damage: Vehicles damaged due to natural disasters, fires, or road accidents where repair costs exceed the market value.
• Voluntary surrender: Owners opting to surrender old, inefficient cars voluntarily to claim new purchase incentives.

Benefits of the Vehicle Scrappage Policy

Vehicle owners receive several financial Vehicle Scrappage Benefits when they choose how to scrap an old vehicle through authorised channels:

• Scrap value: The RVSF pays scrap value based on the steel/metal weight of the vehicle, typically around 4% to 6% of a new car's ex-showroom price.
• Certificate of deposit (CoD): An official digital certificate generated via the VAHAN portal upon handing over the vehicle.
• Road tax concessions: State governments offer road tax rebates of up to 25% for personal vehicles and 15% for commercial vehicles upon presenting a valid CoD.
• New car discount: Auto manufacturers are advised to offer a 5% discount on new car purchases against the Certificate of Deposit.
• Registration fee waiver: Waiving of initial registration fees when purchasing a new vehicle using a CoD.

How to scrap an old vehicle: step by step guide

If you are wondering how to scrap an old vehicle legally in India while maximising your financial return, follow this standard workflow:

1. Check eligibility & documentation: Step 1.

Verify that your vehicle has completed its age threshold or failed its ATS fitness test. Clear all pending traffic challans and ensure there are no active bank loans or hire-purchase liens against the vehicle.

1. Locate a registered facility (RVSF): Step 2.

Visit the official MoRTH VAHAN portal (vscrap.parivahan.gov.in) to find an authorised Registered Vehicle Scrapping Facility in your state. Avoid unorganised local scrap dealers to ensure you receive a valid Certificate of Deposit.

1. Vehicle inspection & scrap quote: Step 3.

Submit your vehicle along with the original Registration Certificate (RC), ID proof, and address proof. The RVSF evaluates the recoverable weight and issues an official scrap payout quote (4–6% of ex-showroom value).

1. Receive certificate of deposit (CoD): Step 4.

Once the vehicle is handed over, the RVSF defaces/punches the RC and uploads the record to VAHAN. You receive a digital Certificate of Deposit (CoD) and a Certificate of Vehicle Scrapping (CVS).

1. RTO de-registration & incentive redemption: Step 5.

The RVSF coordinates with your local RTO to cancel the vehicle's registration in official records. Submit your CoD at the dealership when buying your new vehicle to claim road tax discounts, fee waivers, and OEM concessions.

Frequently Asked Questions (FAQs)

1. Is it compulsory to scrap my old car?

No, scrapping is voluntary and based on fitness rather than vehicle age. You only need to scrap your car if it fails the mandatory automated fitness test and a subsequent re-test.

2. What happens if my car passes the fitness test?

You can keep driving it! If a personal vehicle passes the automated test, you can renew its registration for another 5 years after paying standard fees and green taxes.

3. How much money will I get if I scrap my car?

You get 4% to 6% of a new car’s ex-showroom price as cash value. You also receive a 25% road tax discount, a 5% manufacturer discount, and zero registration fees on your new vehicle.

4. What is a Certificate of Deposit (CoD) and can I sell it?

A Certificate of Deposit is a digital receipt issued when you scrap your car at an authorised facility. Yes, you can sell or transfer it to someone else on the VAHAN portal so they can claim new-car discounts.

5. What documents do I need to scrap my vehicle?

You need your original Registration Certificate (RC), valid photo ID/address proof, bank details for the payout, and a loan clearance NOC if the car was financed. You must also ensure all pending traffic fines are cleared.

6. Can I just scrap my car at a local junk yard?

It is not recommended because local scrap yards cannot legally cancel your RC on the official government VAHAN database. Only a Registered Vehicle Scrapping Facility (RVSF) can safely cancel your registration and issue a valid Certificate of Deposit.

7. What are the rules for Government vehicles?

Unlike private cars, all central, state, municipal, and public sector vehicles older than 15 years must be mandatorily scrapped. They are not eligible for fitness extensions.

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

All Rights Reserved.