Vehicle Scrappage Policy: What It Means For Existing Car Owners

The announcement of the Vehicle Scrappage Policy was one of many highlights for the auto sector in 2021 Union Budget speech. But how does it have an effect on you – the Indian automotive proprietor? We reply your queries and considerations.

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Details of the automobile scrappage coverage are anticipated to be introduced someday later this yr

The ‘Vehicle Scrappage Policy’ has been below improvement for an extended interval, and we did see some conclusive particulars within the 2021 Union Budget speech made by Finance Minister Nirmala Sitharaman. The FM revealed various particulars in regards to the upcoming coverage that’s anticipated to offer an enormous increase to the tune of ₹ 43,000 crore to the auto sector. That being stated, the ultimate coverage is but to be introduced and opens room for various questions and considerations. While we anticipate extra readability with the official announcement someday later this yr, we reply a couple of queries in regards to the upcoming Vehicle Scrappage Policy and the way it will have an effect on you – the automotive proprietor.

Also Read: Union Budget 2021: Voluntary Vehicle Scrappage Policy To Be Announced Soon


Cars outdated than 20 years and business autos older than 15 years will probably be eligible for voluntary scrapping

Which autos will probably be eligible for voluntary scrapping?

Under the proposed automobile scrappage coverage, passenger autos older than 20 years and business autos outdated than 15 years will probably be eligible for voluntary scrapping. In essence, passenger vehicles inbuilt 2000 are eligible to be scrapped below the proposed coverage. That being stated, the autos will nonetheless should endure a health check and re-registration on the finish of the 15-year cycle. The authorities will set-up extra automated health centres throughout India to check if the automobile is match for the street or must be despatched for scrap. The FM additionally stated that if a automobile fails the health check greater than thrice, it might be despatched for necessary scrapping.

What about the price of re-registration and taxes concerned?

According to a current proposal floated by the Ministry of Road Transport and Highways, the ministry plans to extend the re-registration value by 25 instances on autos older than 15 years. If authorised, the health check value of a business automobile will probably be about ₹ 25,000, versus simply ₹ 200 per yr. Similarly, the renewal of registration value for vehicles will go as much as ₹ 15,000 from the present fees of ₹ 600. The proposal additionally plans to extend the registration renewal charge for 2 and three-wheelers to round about ₹ 2,000-3,000, from the present value of ₹ 300. In addition, the federal government can be planning to levy Green Tax on the time of renewal. The renewed registrations will stay legitimate for a interval of 5 years.


Also Read: Vehicle Scrappage Policy Approved For 15-Year-Old Government And PSU Vehicles From April 1, 2022

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The Green tax levied on autos will probably be as soon as in 5 years and must be paid on the time of the health check

What is Green Tax and why ought to one pay it?

Green tax shouldn’t be a very alien idea to these residing in Maharashtra and Delhi. Both areas already levy a inexperienced tax or Environment Compensation Charge (ECC) on autos older than 15 years. Currently, petrol automotive homeowners in Maharashtra pay about ₹ 3000 for the inexperienced tax, which works as much as ₹ 3500 for diesel vehicles. The inexperienced tax on two-wheelers stands at ₹ 2000. For business automobile homeowners, a inexperienced tax is levied after a interval of eight years. Under the brand new proposal, a inexperienced tax will probably be levied pan India and would require you to pay 10-25 per cent of your street tax on the time of the registration renewal. In Delhi-NCR, the inexperienced tax might be as excessive as 50 per cent of the street tax.

How does having a automobile scrappage coverage assist?

The entire objective of getting the automobile scrappage coverage in place and the next taxes is to dissuade older autos from public roads. The authorities says that this can assist cut back air air pollution and dependency on oil imports. At the identical time, the federal government can be pushing the adoption of electrical autos that additionally intend to satisfy the identical objective. According to the Federation of Dealers Association (FADA), there are about 37 lakh business autos and 52 lakh passenger autos eligible for voluntary scrappage with 1990 taken as the bottom yr. About 10 per cent CVs and 5 per cent PVs would possibly nonetheless be plying on the street, says FADA. This does open room for extra retail buy within the auto sector, giving it the much-needed increase particularly within the medium and heavy autos section.

Also Read: A Scrap Vehicle Designed For Leisure Activities

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The scrappage coverage proposal reportedly will embody incentives to prospects for voluntary scrapping autos in trade for purchasing a brand new automobile

Will there be any incentives for voluntary scrapping autos?

While there was no affirmation on the identical, the federal government was devising a compensation plan for these voluntarily scrapping their outdated autos as a part of the coverage. The proposal contains offering incentives to prospects within the type of reductions or waving off street tax or registration fees.

Also Read: M&M Becomes India’s First Authorized Vehicles’ Recycler

What about automobile scrapping centres?


The scrapping trade is unorganised and there aren’t any official centres simply but. Mahindra & Mahindra partnered with MSTC, a Government of India firm, to open India’s first recycling centre in 2018. That stated, there isn’t any phrase extra such organisations and gamers out there. However, we anticipate the coverage to have solutions to those considerations when it’s formally introduced.

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