All you need to know about the newly introduced scrappage policy
The government of India has recently announced the much-awaited vehicle scrappage
policy. There was a desperate plea by the new vehicle manufacturers to introduce the
old vehicle scrappage policy to give a necessary boost to the ailing automotive industry in
the country. It is estimated that there are over 2 crore vehicles that are eligible to be
scrapped by 2025. The policy not only aims to boost new vehicle sales but also aims to
reduce the ever-increasing air pollution & accidents in the country. Let’s understand
what it means to all of us.
What does the policy say?
- Its noteworthy that the entire policy is voluntary and a car over 20 years old does not automatically get scrapped. Hence its voluntary. older cars can be kept on the road, but they would have to undergo a mandatory fitness test and would also attract additional fees and taxes.
- The vehicle will have to go to an authorized testing facility to get certified for fitness. Booking can be done online. The fully automated facility will certify if the vehicle is fit for an extension of the registration. Those not fit will be mandatorily scrapped.
- Personal vehicles will also be charged a Green Tax at the time of the renewal of the Registration Certificate after 15 years. Green tax is already applicable in some cities, but this is now set to be levied nationwide with differing rates, with highly polluted cities going up to as much as 50 percent of the road tax. Greener vehicles like electric vehicles and alternate-fuel vehicles using CNG, ethanol and LPG will be exempted altogether. In addition to the green tax, a re-registration fee is also applicable.
- New car purchases will be incentivized via 25% concession on road tax and a complete waiver on the registration fee. Additional concessions can also come from manufacturers, who are advised to provide a discount of 5 percent on buying a new vehicle against a scrapping certificate.
- The Ministry of Road Transport and Highways (MoRTH) has issued a draft notification to disallow the re-registration of government vehicles older than 15 years.
- Commercial vehicles to be levied a green tax on vehicles older than 8 years against the personal vehicles of 15 years. This is to disincentivize their use as they are high contributors to air pollution.
Policy for vintage & Classic vehicles
The Ministry of Road Transport has published a draft for a new set of rules with regards to
registration, certification of any passenger car or two-wheeler that is at least 50 years older than its original first date of registration. A new certificate will cost the owner Rs 20,000 per car and will be valid for a period of 10 years. Subsequently, the renewal of said registration will cost the owner an additional Rs 5,000. The vehicles that are classified as a vintage class and would be allotted numbers with ‘VA’ mentioned on the number plate.
What’s not clear
While the policy clearly defines that the scrappage policy is voluntary, few things are not yet clear-
- Policy is vague on the cars that are between 30 to 49 years old. Its important that these vehicles are expressly exempted. Few cars like the premier Padmini, Hindustan Ambassador, Maruti Suzuki SS80, old Mahindra jeeps, Tata Sierra etc. are contribution to classic car movement and needs to be preserved. These vehicles are currently classified under heritage class in a popular Cartier Concourse event.
- The current procedure is to present the car for fitness to the RTO officer and it is certified for fitness for next 5 years. The system is slated to get automated & computerized without human intervention. Currently India has just 7 such automated fitness centers. Remains to be seen how soon the scaleup can happen and how effective is this system going to be to accommodate specs on older vehicles.
- Currently vehicle scrappage is largely unregulated. There is an effort to make it more organized with large corporates like Mahindra Cerco coming in. Hence legitimacy of scrappage certificates from unregulated market upon which incentives are based upon needs to be carefully evaluated
Timelines for implementation
- Rules for Fitness Tests and Scrapping Centers: October 1, 2021
- Scrapping Government and PSU vehicles above 15 years: April 1, 2022
- Mandatory fitness testing for heavy commercial vehicles: April 1, 2023
- Mandatory fitness testing (phased manner for other categories): June 1, 2024
While the initial policy draft has been rolled out, the government is still inviting suggestions to make the process foolproof without severely effecting the existence of cars that played a significant role in our civil society and that holds great emotional value to all of us. The intention is very clear, make it expensive to own older cars so that only serious car enthusiasts can hold up an old car at a given price. If one is an enthusiast, there’s nothing to worry as the policy does not advocate mandatory scrappage of personal vehicles. Just advises to maintain your prized procession, plan, and save up a bit when the next fitness certification is due.