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.
Mallika Sadhu is a journalist committed to revealing the raw, unfiltered truth. Mallika's work is grounded in a dedication to transparency and integrity, aiming to present clear and impactful stories that matter. Through comprehensive reporting and honest storytelling, she strives to contribute to provide narratives that genuinely inform and engage. When not dwelling in the world of journalism, she is immersed in the colors of her canvas and pages of her journal.
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