Vehicle Scrappage Policy in India

Old, unfit, and ill-maintained vehicles are one of the prime contributors to environmental pollution. The Vehicle Scrappage Policy was introduced in India to mitigate this problem. The policy nullifies the re-registration of cars that are above 20 years old. For commercial vehicles, the threshold is 15 years as they face extensive and heavy usage compared to personal vehicles. Vehicle Scrappage Policy is a ground-breaking step on the part of the government both in terms of pollution control and vehicle management. Here’s all you need to know about Vehicle Scrappage Policy and its benefits.

What is Vehicle Scrappage Policy in India?

An initiative of the Government of India, Vehicle Scrappage Policy focuses on taking old and unfit vehicles off the road and scrapping them. Let us look at it in detail:

• The idea behind the scrappage policy is to gradually develop an ecosystem that phases out vehicles contributing to pollution by exaggerated measures. Most of these are old and unfit vehicles.
• The scrap policy is expected to significantly and effectively reduce the carbon footprint caused by vehicle emissions.
• The vehicle scrappage policy will be brought into force starting 1^st April 2023 for Heavy Commercial Vehicles (HCVs).
• For other Commercial Vehicles and Private Vehicles, the scrappage policy will be effective from 1^st June 2024.
• Commercial vehicles and private vehicles that are older than 15 years and 20 years, respectively, will have to undergo a fitness test. If these vehicles do not get clearance under the fitness test, they must be scrapped.

Vehicle Scrappage Policy 2019 Highlights

Apart from the pollution control measure, the scrappage policy is also seen as a potential catalyst for the sluggish automobile sector, which witnessed a massive downturn in 2019. Though in 2020, post-Diwali, the sector did witness some improvement, it is far from satisfactory. The vehicle scrappage policy is expected to create demand for new vehicles, as the old and unfit vehicles will be phased out.

The key highlights of the scrappage policy are:

• The primary objective of the policy is to scrap unfit cars and bikes
• All the rules and regulations surrounding the scrappage policy will be outlined by the Ministry of Road Transport and Highways (MoRTH)
• According to the MoRTH, scrapping old vehicles will make the owners eligible for some benefits.
• This policy will help in reducing pollution density. This is subjective to the existing pollution density of a place.
• This administrative policy will pave the demand for safe, technologically updated, and environment-friendly vehicles.

Updated Vehicle Scrappage Policy 2021 Highlights

The vehicle scrapping policy in India was introduced to take old and unfit cars and bikes off the road. The main objective behind the scrappage policy was to come up with an effective and feasible measure to check the high carbon emission caused by unfit cars. The recent review highlighted some significant additional aspects of the policy. These are:

• Checking pollution by scrapping vehicles that do not pass the fitness test
• Higher safety for passengers, vehicles, and pedestrians
• Employment generation in the automobile industry
• Developing a formal and organised vehicle scrappage sector
• Improving fuel efficiency
• Reducing the cost of maintenance
• Better and higher access to cost-efficient raw materials for industries such as automobile, steel, and electronics

Given below is the timeline of how the policy will be brought into force:

Benefits of the Vehicle Scrappage Policy

Let us see how the vehicle scrappage policy will help the environment, vehicle owners, the automobile industry, and the economy as a whole.

• As mentioned earlier, the scrappage policy will help reduce pollution and contribute to environmental preservation.
• Currently, approximate estimates show that there are 51 lakh light vehicles (both private and commercial) that are more than 20 years old. This is an estimate of only light vehicles. Scrapping old and unfit vehicles will create demand in the automobile industry, as the old ones will now be replaced with new vehicles.
• There will be additional job creation in the automobile sector. New scrappage stations will enhance the employment scope in the industry.
• The nature of demand for vehicles will get augmented for good. There will be a demand for comparatively safer and technologically upgraded vehicles that come with better and superior features.
• This policy will provide a major push to the recycling industry. This will not only make the recycling sector more active but create jobs in this industry as well. In addition, it will also create further improvement in the R&D of waste and recycling management.
• Scrapping old and unfit vehicles may come with significant tax benefits for vehicle owners.
• For parts that are fine and fit, vehicle owners have the scope to get the best possible resale price.

How does scrapping your car affect insurance?

The registration certificate must be cancelled for the scrapping of a car. Your insurer must be informed of your car’s scrapping. When a car is scrapped, under the vehicle scrappage policy, its registration is automatically cancelled, as it is no more fit to be driven on the roads. Consequently, the insurance company also cancels the vehicle insurance policy associated with the concerned car. The cancellation of the car insurance plan and the registration certificate is necessary to prevent the mishandling and theft of pre-existing vehicle information.

Listed below are some important aspects of how car scrapping under the vehicle scrappage policy affects car insurance:

• Since your vehicle insurance policy gets cancelled, you do not have to pay premiums going forward.
• If you owe any refund from your vehicle insurance provider for the premium that has already been paid, ahead of the scrapping, it will be calculated on a pro-rata basis.
• Note, the year when you give your car for scrapping if you have raised a claim earlier, you cannot cancel the insurance plan. It will be cancelled in the succeeding year.

Fitness test for vehicles

Given below are the key details surrounding the fitness test for vehicles based on which it will be decided if the cars are to be scrapped or not:

• The fitness test essentially will consist of a detailed inspection of the vehicle to check the vehicle’s roadworthiness.
• The test will also check how much the vehicle is causing environmental pollution.
• The fitness test of the vehicles has to be carried out at authorised Automated Testing Stations only.
• The validity of this fitness test will be five years, post which the vehicles will have to go through a fitness test again.
• Those vehicles that do not clear the fitness test won’t be able to renew their registration.
• It is quite possible that some of the older vehicles, especially those which have been maintained well, pass the fitness test. While it would be unfair to scrap them, they may start emitting high amounts of carbon soon. As a middle ground, a green cess of 10-15% may be levied on these older vehicles. This green cess will vary from place to place.
• Such vehicles which do not pass the fitness test will have two options—either scrap the vehicle or repair it such that the repaired quality passes the fitness test.

Where should I get the vehicles tested or scrapped?

To get your vehicle tested or scrapped under the scrapping policy, follow the steps given below:

Step 1: Visit the nearest Automated Testing Station (ATS)

Step 2: Get your vehicle tested

Step 3: If you want to scrap your vehicle, then take your vehicle to an authorised scrapping centre

Or,

If you want to dispose of your vehicle, you will have to wait till ATS facilitate the same. For the disposal of the tested vehicles that could not pass the fitness test, you will have to initiate the process through the VAHAN portal.

Or,

Get your vehicle repaired such that it passes the fitness test.

What are the incentives for scrapping old vehicles?

On scrapping the old vehicles, you will get the following incentives:

• Get a discount: If you scrap your old unfit vehicle under the scrappage policy of India, you can get a discount of 4% to 6% if and when you purchase a new vehicle. This discount applies to the ex-showroom price of the new vehicle.
• Registration fee waiver: If you scrap your old vehicle, you will get a Certificate of Deposit, which validates and documents the transfer of ownership from you to the Authorised Vehicle Scrapping Facility (AVSF). On producing the Certificate of Deposit, the registration charges for a new vehicle will be waived.
• Road tax concession: Scrapping old vehicles can earn you a road tax concession as high as 25% for non-commercial vehicles and 15% for commercial vehicles.
• Discount on purchase of new vehicle: While buying a new vehicle, on presenting the Certificate of Deposit, you will get an additional discount of 5%. This discount is over and above the scrap discount discussed above. It is given by vehicle manufacturers at the request of the government.

What are the disincentives of owning an old vehicle?

Given below are the major disincentives for owning an old vehicle:

• High fees for the fitness test: If a commercial vehicle is older than 15 years, then the fees for the fitness test and the issuance of a Fitness Certificate will attract higher charges.
• High registration renewal fees: If a private vehicle is older than 15 years, then the registration renewal charges will be higher.
• Green cess: In addition to the road tax, following the policy outlines of the vehicle scrap policy 2021, a green cess of 10-15% will be levied on old vehicles.

Fee for testing old vehicles and renewing vehicle registration

Given below are the fitness test fee and registration renewal fee structure of an old vehicle under the vehicle scrapping policy of India.

Fitness Test Fee (for vehicles more than 15 years old)

Registration Renewal Fee (for vehicles more than 15 years old)

Under what conditions are my car liable to be scrapped?

Some fundamental criteria give the scrappage policy a formal outline. These criteria determine which vehicle must be scrapped and which can continue its run. These conditions are:

• Both commercial and private vehicles that are more than 15 years old have to undergo a fitness test for renewal of their registration.
• If the vehicle is found to be unfit, it should either be scrapped or repaired so that it clears the fitness test. The vehicle owner must re-apply for the fitness test.
• If a vehicle fails to clear the fitness test, it will be marked as End-of-Life-Vehicle (ELV) and must be scrapped.

How to scrap a car in India?

If you are planning to scrap your old car under the vehicle scrap policy 2021, then follow these steps:

Step 1: Connect with the scrapping centre

• Either call an authorised scrapping centre or contact them through their website
• Schedule an appointment
• Either drive your vehicle to their scrap yard or request them to collect the vehicle from your place. Be aware if you take their service of collecting the car from your place, you may have to pay towing charges

Step 2: Documents required

• PAN Card
• Original registration number of the vehicle
• End-of-Life-Vehicle certificate
• If you do not take your vehicle to the scrapping facility, authorisation on a stamp paper for the authorised person so that they can submit the vehicle at the Authorised Vehicle Scrapping Facility (AVSF)
• Identity proof of the authorised person (Aadhaar card, Voter ID, Passport)
• A disclaimer or an undertaking by the vehicle owner stating all furnished information is true and correct to their knowledge
• A cancelled cheque
• Photograph of the vehicle owner

Step 3: Commencement of the scrappage process

• First, the tyres, battery and CNG kit (if there is one) are removed
• The air conditioning unit's refrigerant is drained and delivered to the de-pollution station
• All liquids including engine coolant, gearbox oil, petrol, brake fluid, steering fluid, windshield washer fluid, and engine oil are removed
• Next, the fuel tank and the exhaust system of the vehicle are removed
• After that, body panels, the boot lid, bonnet, fenders, doors, headlights, and bumpers are removed. This is usually done manually
• Then, the dashboard, roof liner, seats, floor mats, steering wheel, and other interior parts are removed. The vehicle's wiring system is likewise taken out
• The vehicle's running gear is then removed, it is elevated, and the engine, brakes, and suspension are also taken out of the vehicle
• Finally, the Vehicle Identification Number (VIN) is cut out

Step 4: Recycling the remaining part

• After the above-mentioned procedure is done, only the outer shell of the vehicle remains
• Using a crane, this outer body is then dumped into a crushing unit. Once the shell is crushed, the residue is steel bale. This steel bale is sold for smelting
• Parts that are scrapped or removed are also crushed to derive steel bale
• In the whole process, utmost care is taken to ensure that AC gasses or oils are not discharged into the land or air

Step 5: Issuance of the Scrappage Certificate

• After the scrapping process is completed, a “Certificate of Destruction” is issued
• Using this “Certificate of Destruction” you can get your vehicle de-registered at your local RTO
• Once your registration is cancelled, you will get the scrap value of your car or bike either through a cheque or it will be directly credited to your account

Owning old vehicles will be costly

Scrapping your old unfit vehicle under the Vehicle Scrappage Policy can be a great decision in terms of cost-benefit comparison. This is because driving an old vehicle comes with several additional costs. Some of them are:

• Higher maintenance costs: Older vehicles, especially those 15-20 years old, usually come with higher maintenance costs. And, more often than not, these costs go on increasing with each passing year.

• Higher fuel consumption:The mileage of the old vehicles decreases with time due to regular wear and tear, after prolonged regular use. This means less performance and high fuel consumption.

• Higher fees:The registration renewal fees of vehicles older than 15 years are relatively much higher. Similarly, the fitness test charges of such vehicles are also higher than newer ones.

• Green cess: Older vehicles attract a green cess of 10-15% over and above the road tax.

• Higher registration fee for vintage cars: Renewing the registration of a vintage vehicle is also costly. The cost of getting the new certificate for your vintage vehicle is Rs 10,000. It is valid for 10 years only. Post that, you will have to get subsequent registration renewals every five years, which will cost Rs 5,000.

RTO rules for car scrapping process in India

The RTO rules for the car scrapping policy include:

• The owner of the vehicle has to write an application to the RTO for car scrapping.
• The vehicle owner must submit an affidavit declaring that there is no pending loan associated with the vehicle or pending insurance claims or traffic challans. And lastly, the vehicle is not related to any running or pending court cases.
• The registration certificate of the vehicle has to be surrendered. The RTO will keep the registration number and the cut-out VIN as records for future use.

The Authorised Vehicle Scrapping Facility (AVSF), where the scrapping procedure is done, will issue a confirmation letter with its address on the letterhead. This has to be submitted to the RTO along with the pictures of the scrapped vehicle.

RTO rules for deregistration and scrapping of old vehicles

FAQs

Is it mandatory to scrap an old vehicle?

It is not mandatory. However, if the vehicle is older than 15 years and is unfit, then it is better to scrap it.

What does a fitness test check?

The fitness test checks how roadworthy your vehicle is and how much is it adding to the pollution levels.

What will be the consequence of failing the fitness test?

If your vehicle fails to clear the fitness test, you can either send it for scrapping or you can repair it and re-apply for a fitness test.

Which Indian ministry is related to the Vehicle Scrappage Policy?

The Ministry of Road Transport and Highways (MoRTH) is the administrator of the Vehicle Scrappage Policy.

Will the government-authorised scrapping centres give me the best car scrappage deals?

Though exact information is awaited on the cost details of the scrappage deals of the government-authorised scrapping centres, it is speculated that the best possible deals with be available here.

Is the car scrappage scheme applicable for petrol and diesel vehicles?

Yes, the car scrappage scheme is applicable for both petrol and diesel vehicles.

Why was the Vehicle Scrappage Policy needed?

The vehicle scrappage policy was introduced to scrap the old unfit vehicles that are increasingly adding to environmental pollution because of their higher carbon emission. In addition to environmental preservation, this scrappage policy will also help expand the automobile sector.

How much will I get to scrap my car?

While the exact value may differ, you can expect to get 4-6% of the vehicle’s original ex-showroom price if you scrap your car.