Vehicle Scrappage Policy 2021

On August, 2021, the government launched the vehicle scrapping policy (Voluntary Vehicle-Fleet Modernisation Program), which was announced in the Union Budget 2021-22.

Aim: Creating an eco-system for phasing out unfit and polluting vehicles and creating an infrastructure for automated testing of vehicles that have completed the registration period.

Salient Features: It intends to create scrapping infrastructure in the form of Automated Testing Stations and Registered Vehicle Scrapping Facilities.

• Incentives will be provided for Scrapping Old Vehicles and Buying New Ones: Vehicle manufacturers can give up to 5% discount for buying new vehicles. Incentives will also be provided in registration fees and road taxes.
• Vehicles to be Exempted: Strong hybrids and electric vehicles, vehicles using alternative fuels such as CNG, ethanol and LPG and Farm and agricultural equipment such as tractors, tillers and harvesters will be exempted.
• Fitness Testing: Five hundred automated vehicle fitness testing stations across India will be setup on a PPP basis. Private vehicles – which are over 20 years old – will have to undergo fitness tests.
• Green Tax: Vehicles that pass the automated tests will be subjected to a ‘green tax’, at a rate of additional 10 percent to 25 percent of road tax at the time of the renewal of the vehicles’ fitness certificate.
• Testing of Old Vehicles: Old vehicles will be tested at the Automated Fitness Center and the fitness test of the vehicles will be conducted according to international standards.

Benefits: It will help in modernizing India’s vehicle fleet, boost the Atmanirbhar Initiative, reduce pollution and promote circular economy.