Team AckoApr 1, 2021
February 2021 began with the announcement of the Union Budget. Amidst other things, Indian Finance Minister, Nirmala Sitharaman announced the Vehicle Scrappage Policy. The Ministry of Road, Transport and Highways (MoRTH) will reveal more details about this crucial policy in the coming days. Does this mean you have to scrap your old vehicle? How old is old, is there an age limit? And what are the benefits of such a plan? Read ahead to know the answers to these questions and other related points about the Vehicle Scrappage Policy in India.
The Vehicle Scrappage Policy is an official declaration by the government concerning rules and regulations to be followed while scrapping a vehicle in India. Developed countries have a detailed policy in this regard. However, India did not have an official policy on this front till now.
As per the recent announcements related to the policy, old and unfit vehicles whose life cycle is complete shall be scrapped. This will be a voluntary process but defined by rules. For instance, old vehicles (15 to 20 years) need not be scrapped compulsorily. However, they will have to undergo a fitness test after a defined period. Failing the test would most likely lead to vehicle scrappage.
The Indian automobile sector has been in a troubled zone since the latter half of 2019. The following COVID-19 pandemic made the situation even worse. Although post-Diwali sales in 2020 have uplifted the sector to an extent, the situation is still worrisome. The scrappage policy is said to help the struggling automobile sector in India. With old vehicles being phased out, there will be a demand for new vehicles. Scrapping unfit vehicles will also benefit the environment.
Here’s a list of key highlights related to the Vehicle Scrappage Policy announcement.
The policy is directed towards building a system to scrap unfit vehicles in India.
Rules and regulations will be made around the actual scrapping process, which shall be laid out in the announcement made by the MoRTH.
Vehicle owners will be given certain benefits for scrapping old vehicles.
The scrapping of unfit vehicles will help reduce air pollution to a considerable extent (subjective as per location).
People will look forward to buying environment-friendly, safe, and technologically advanced vehicles.
Different types of vehicles are driven on Indian roads. Due to this diversification, the same rules cannot apply to all cars. Thus, the need for categorisation of vehicles concerning scrappage. Here are the details.
The Scrappage Policy for government vehicles was approved in January 2021. As per this approval, vehicles belonging to the Centre as well as State Government, that are more than 15 years old, shall be scrapped. Such a policy will come into effect next year. The date set for the application of this policy is 1 April 2022.
Vehicles that are used for commercial purposes; for example, transport vehicles, are termed as commercial vehicles. After completion of 15 years, the commercial vehicle will need to undergo a fitness test. If considered unfit, the vehicle shall be scrapped as per the commercial vehicle scrap policy rules.
Vehicles used by citizens to commute from one place to another are termed as private vehicles. The age limit to undergo a fitness test for a private vehicle is set at 15 years.
Vintage cars and bikes are generally older than the average vehicle on the road. However, they are driven less frequently and maintained well. Thus, this is a separate category and the nature of such vehicles shall be considered regarding directives around scrapping them.
Just as you are supposed to check your vehicle’s emission levels via the Pollution Under Control (PUC) test, you will be required to put your vehicle through an automated Fitness Test as well after the stipulated period, which is 15 years for a private vehicle. The validity of such a test would be for five years. Post which, the vehicle is supposed to undergo another one. Each test would cost around Rs. 40,000. A Green Cess (around 10 to 25% of road tax), which varies as per location, will also be charged. Also, old vehicles need to renew their registration, which leads to more expenses.
Failure to pass the Fitness Test will cause problems while renewing the vehicle’s registration. A vehicle that has failed the test will be considered unregistered. And driving an unregistered vehicle on public roads is a punishable offence. The likely option as a vehicle owner, in this case, would be to scrap the vehicle. Or else repair the vehicle so that it passes the Fitness Test and then follow the process and make the payment for renewing the registration.
The overall expenses related to renewing an old vehicle and the mandatory Fitness Test while re-registration is expected to dissuade vehicle owners from continuing with the vehicle. Comparatively, parting ways by scrapping the vehicle seems like a feasible option. Moreover, certain fees are expected to be hiked in the future. Such fee hikes can be periodic considering inflation.
Here are the costs to be incurred if your private vehicle is more than 15 years old.
Fee for Fitness test
Fee for renewing registration
Here’s a list of potential benefits of the new vehicle scrap policy for the economy, automobile sector, vehicle owners, and others.
Scrapping unfit vehicles will result in less air pollution and better air quality.
With old vehicles being scrapped, the demand for new vehicles will rise as the old ones will need to be replaced by new ones. More than 51 lakh light motor vehicles (private and commercial) are more than 20 years old.
Overall, the automobile sector will benefit from the new scrappage policy leading to more job opportunities. For example, new vehicle scrapping centres will need manpower.
New advanced vehicles will be comparatively safer. For example, new cars come with superior safety features.
The recycling industry will also be more active leading to higher revenue.
Vehicle owners might receive tax benefits as an incentive to scrap an old vehicle.
Vehicle owners might also get the best price for car scrappage for workable parts such as tyres.
This section will answer common queries about the Government’s car scrappage scheme in India.
Is it mandatory to scrap an old vehicle?
Currently, it is not mandatory to scrap an old vehicle. However, if the vehicle is considered unfit, it would be better if you scrap it.
What is the aim of such a policy?
The primary aim of the policy is to ensure that unfit vehicles are scrapped leading to less pollution and more growth opportunities for the automobile sector.
What does a Fitness Test check?
The Fitness Test is conducted to check the roadworthiness of a vehicle along with its impact on the environment.
What will be the consequence of failing the Fitness Test?
The most important consequence of failing the Fitness Test would be the inability to renew the vehicle’s Registration Certificate.
Is there a fee for a Fitness Test?
Yes, you will have to pay a prescribed fee for a Fitness Test as per the new policy. It can be approximately Rs. 40,000 and can be subject to changes in the future. As per the Parivahan website, currently, the fee for conducting a Fitness Test for a vehicle is around Rs. 200 to Rs. 1000, depending upon the type of vehicle.
Which Indian ministry is related to the Vehicle Scrappage Policy?
The Ministry of Road, Transport and Highways (MoRTH) is associated with the Vehicle Scrappage Policy.
Will the Government-authorised scrapping centres give me the best car scrappage deals?
More details are awaited on this front. This should be made clear by the upcoming policy explanation by MoRTH.
Is the car scrappage scheme applicable for petrol and diesel vehicles?
Yes, the policy is applicable for both petrol and diesel vehicles.
How will the new policy lead to safer roads?
Scrapping old vehicles will prompt people to buy new and safer vehicles. Latest vehicles come with superior safety-based technology, such as advanced braking systems. This can lead to safer roads.
How will the scrappage centres be authorised by the Government?
Yes, the vehicle scrapping process will be performed at a Government-authorised vehicle scrapping centre.
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