India is set to offer attractive discounts for those who choose to scrap their old vehicle for buying new ones. This initiative was announced by Nitin Gadkari, the Minister of Road Transport and Highways, which aims to modernize India’s vehicle fleet and promote the use of cleaner and safer automobiles. 

Under the scheme, buyers of commercial and passenger vehicles can get discounts between 1.5% and 3.5% if they have a valid Certificate of Deposit (CD) for their old, scrapped vehicles. This initiative is part of the Vehicle Fleet Modernization Programme (VFMP). 

Objectives of the Vehicle Fleet Modernization Program 

Promoting Cleaner Transportation 

It promotes the use of newer and more efficient vehicles to reduce environmental harm. 

Ensuring safety  

To ensure all cars running commonly on Indian roads are new and safe. 

Fostering a circular economy 

It advances the circular economy within the automobile sector by modernizing the vehicle fleet. 

Encouraging Manufacturer Participation 

It encourages active involvement from numerous automobiles manufactures in the Vehicle Fleet Modernization Programme (VFMP). 

Discounts offered by Major Car manufactures on Vehicle scrapping 

Maruti Suzuki, Tata Motors, Mahindra and Mahindra, Hyundai Motor, Kia Motors: 

Discount on Scraping: 1.5 % off the ex-showroom price or minimum of ₹20,000 on a new vehicle  

Duration of the discount: Valid till next year 

Condition for discount: Applicable for scraping of an old car 

Toyota Kirloskar, Honda Cars, Nissan India, Skoda Volkswagen, Renault and JSW Motor: 

Discount on new vehicle: 1.5 % off the ex-showroom price or minimum of ₹20,000 on a new vehicle  

Duration of the discount: Valid till next year 

Condition for discount: Applicable for scraping of an old car 

Mercedes Benz 

Discount on new vehicle:  Flat ₹25,000 off on a new vehicle  

Condition for discount: Applicable for scraping of an old car 

Tata Motors, Volvo Eicher, Ashok Leyland, Mahindra & Mahindra, Force Motors, and SML Isuzu: 

Discount on new vehicle: 1.5 % to 3.5% off the ex-showroom price on new cargo. 

Duration of the discount: Valid till next two years 

Condition for discount: Applicable for scraping of an old car 

Current Status of Vehicle Scrapping in India 

Till now, approximately 1.2 lakh vehicles have been scrapped at official centres. The scrapped vehicles include 61,000 government vehicles older than 15 years. 

The government aims to scrap around 90,000 old government vehicles by March 2025. In addition to boost participation, several states and Union territories have introduced tax concessions and removed pending liabilities for vehicles sent to scrapping centres. 

Incentives or Benefits by Scrapping Old Vehicles 

If you choose to scrap your old vehicle at a licensed scrapping center, you can enjoy incentives or benefits which includes: 

Discount from Government 

The person will receive a discount of 4-6% on the ex-showroom price of a new vehicle. 

Discount from Manufacturer 

The person will receive 5% discount on the new vehicle when presenting a valid scrapping certificate. 

Rebate on Road tax 

State governments are advised to provide a rebate of up to 25% on road tax for private cars and 15% for commercial vehicles. 

Registration fee cancellation 

The registration fee for the new vehicle will be removed and cancelled. These incentives could reduce the cost of a new car by about ₹60,000 to ₹70,000.  

Vehicle Fitness and Scrapping Regulations 

Under the scrapping policy, vehicles older than 20 years need to pass a fitness test. If found unfit, the vehicle cannot legally operate on the roads. The criteria of these fitness tests include: 

• Emissions of vehicle  

• Braking efficiency 

• Safety equipment 

Vehicle failing these tests will be declared End Of Life Vehicles (ELVs) and must be scrapped. The government plans to increase fees for these tests and establish Registered Vehicle Scrapping Facilities (RVSFs) across the country encouraging both public and private sectors involvement. 

Tentative timeline for application of Proposed Scrappage Policy 

The tentative timeline for application of Proposed Scrappage Policy is scheduled as follows: 

• October 1, 2021: Rules for fitness test and scrapping centers. 

• April 1, 2022: Scrapping of Government and PSU vehicles older than 15 years. 

• April 1, 2023: Mandatory fitness testing for heavy commercial vehicles. 

• June 1, 2024: Gradual mandatory fitness testing for additional vehicle types. 

Global Examples of Scrappage Policies 

India is not the only country with scraping policies. Several other countries have also practiced similar policies to encourage cleaner vehicles and lower emissions: 

China 

It offers regional incentives such as subsidies and tax breaks for scrapping old vehicles and buying new vehicles. 

Germany 

The ‘Umweltprämie’ program provides financial incentives for scrapping old diesel vehicles for electric or hybrid cars. 

South Korea 

It provides subsidies and tax benefits for replacing old diesel vehicles with electric or hydrogen fuel cell vehicles. 

United Kingdom 

It features the ‘Plug-in Car Grant’ which supports the purchase of electric or plug-in hybrid vehicles, alongside local discounts for low-emission cars. 

France 

It implements various measures which includes grants and reduced registration fees to encourage the scrapping of old diesel vehicles in favor of electric or hybrid models.