What Is The New Vehicle Scrappage Policy? For India

New Vehicle Scrappage Policy in India

Vehicle Scrappage Policy
Vehicle Scrappage Policy

India's Finance Budget for 2021 (Union Budget 2021) has been presented by the Finance Minister Nirmala Sitharaman, which has taken some very important decisions regarding the Automobile Sector such as Vehicle Scrappage Policy and many more.

Topics Related Automobile sector discuss on Budger 2021 India :

  • Announcement of Voluntary Vehicle Scrappage Policy
  • A budget of Rs. 18,000 crore for the acquisition of more than 20,000 buses.
  • Infrastructure Allocation and 100% tax exempted for investment in infrastructure projects.
  • Custom Duty Hike on Auto Parts

The most important of these is the Vehicle Scrappage Policy. Everyone has some questions about this policy like, what exactly is a vehicle scrappage policy? When will this policy start? What are the advantages and disadvantages? What about old cars? Will this policy apply to people's Private and Transport vehicles? Will there be any different rules for private vehicles? Really, can 15 year old vehicles be a headache? We will see the answers to all such questions in this post, let's get started.

What is the New Vehicle Scrappage Policy In India 2021

Vehicle Scrappage Policy
Vehicle Scrappage Policy

The implementation of the vehicle scrappage policy is expecting to start from April 1, 2022. The decision will take after discussions between the Central and State Governments. According to the policy, the use of 15 year old vehicles will be banned.

Actually, the central government wants to exclude cars and commercial vehicles that are more than 15 or 20 years old. There will be two benefits from this. The first is that it will help in reducing air pollution in urban areas and second, There will be an increase in automobile sales, which were already sluggish before the epidemic.

After the implementation of this policy, fitness tests of vehicles older than 20 years will be done. According to the finance minister, the fitness test will be conducted at an automated fitness center and it will be decided here whether the vehicle is still able to run on the road. If a vehicle fails in the fitness test, it will have to be sent for scrap.

Also, Read: Top 10 Best CNG Cars In India

👉 What Is The Rule

The voluntary vehicle scrappage policy has been announced in Budget 2021-22. It is believed that this will help the auto industry to overcome the adverse effects of the Covid-19 Epidemic. According to this scrapping policy, vehicles running in the country will have to undergo a fitness test as per the schedule.

Accordingly, individual vehicles will have to undergo fitness tests after 20 years and commercial vehicles after 15 years. Fitness testing of old vehicles will be done at automated centers soon to be set up by the government. These centers will have fitness tests of vehicles where they will be certified.

👉 Driving an old vehicle will be very expensive

Vehicle Scrappage Policy

If you want to keep your old car even after the new policy arrives, it will be very expensive for you to do so. This is because the registration fee for a car older than 15 years will be higher than the fitness fee. This will cause trouble to many people.

When the new vehicle scrapping policy comes into force after a few days, then it will be very expensive to keep the vehicles older than 15 years. The reason for this is that the cost of taking a fitness certificate will be more than 62 times and the cost of renewing the registration of a private vehicle will also be about 8 times more. In addition to road tax, every state will also charge green tax, which the owner of the car will have to pay.

Also, Read: Top 5 Best Pickup Trucks In India

FAQ's: Vehicle Scrappage Policy

Q1. What is a Fitness Test?

According to the guidelines of the new policy, each vehicle will have to undergo a fitness test after a certain period of time (15 or 20 years). Vehicles will be allowed to run on the road after passing the fitness test. According to sources, the fitness test will cost Rs 40,000 in addition to Road Tax and Green Tax.

All vehicle owners must renew their personal vehicle and commercial vehicle registration after a period of 15 years or 20 years. This fitness certificate will only be valid for 5 years, after which you will have to pay the same price again to get the new fitness certificate.

Q2. What is Road Tax?

Vehicle Scrappage Policy

Road tax is charged with the registration of your vehicle, which allows you to drive on all the roads of the state. In India, road tax is levied on all vehicles, whether private or commercial.

This tax is levied on behalf of the state government, so the road tax varies from state to state. This is the reason that when you shift your car from one state to another, then you have to pay road tax again. How much will be the tax, it depends on the car.

Q3. What is Green Tax?

Vehicle Scrappage Policy

The government had said that it would soon plan to impose a green tax on old polluting vehicles to protect the environment and to control the pollution. Also, vehicles on alternative fuels like Hybrid, Electric, CNG, Ethanol and LPG will be exempted. The money collected by the green tax will be used to combat pollution.

Under the scheme, green tax at the rate of 10 to 25 per cent of road tax can be levied on vehicles older than eight years at the time of renewal of fitness certificate. However, after the approval of the ministry, the proposal has been sent to the states for consultation.

Q4. Is there an option to transfer the vehicle in another state?

If your vehicle is older than 15 or 20 years, it is possible to Re-register the vehicle in the nearest state. But, it is a very complicated process. This registration must be done before the RC of the car expires. More rules, terms and conditions as well as the process related to the RTO system in the two states can be even more of a headache.

Q5. What is Car Scraping?

If you don't want to Re-register your old car in another state, scraping is the only option before you. In this, every part of the car is removed and recycled. This eliminates the possibility of the old car being used illegally or for crime.

Q6. What happens to registration after car scrap?

Once the car scraping process is complete, Re-registration takes place. Then the registration number becomes free. This number is used for registration of other vehicles in future. It is also necessary to inform the concerned insurance company while scraping the car.

Q7. What will happen if the vehicle fails in the fitness test?

According to these guidelines, no vehicle will be allowed to run on the road without passing the fitness test. Driving vehicles that do not pass this test will be considered illegal. If a vehicle has not undergone a fitness test, it will be considered unregistered.

No one can stop the fitness test while going through the mandatory registration process and the vehicle will not be registered if the vehicle fails the test. However, if the vehicle fails the fitness test three times, the vehicle owner will have no option but to scrap it.

👉 Vehicle Registration fees will increase

After the vehicle scrap policy is implemented, the registration charges for private or commercial vehicles older than 15 years will also increase. The registration fee for a two-wheeler will increase from Rs 300 to Rs 1000 and for cars this fee will increase from Rs 600 to Rs 5000. Registration of every private vehicle will have to be done after 15 years and after that the same process will be done after every 5 years.

👉 Employment will be available

Vehicle Scrappage Policy

The government claims that sales of new vehicles in the country will increase after the implementation of the new scrapping policy. With this, the country's automobile business will go from Rs. 4.5 lakh crore to Rs 6 lakh crore. An investment of Rs. 10 thousand crores will be made from this policy and the creation of about 50 thousand new jobs is being claimed by the government.

👉 Pollution will be controlled

Vehicle Scrappage Policy

There are currently 10 million vehicles in the country that are outdated and cause more pollution. These older vehicles are responsible for about 10 to 12 times more pollution in the country.

If these vehicles are removed from the roads, pollution will be reduced by 25 to 30 percent. According to a study by IIT, about 70 percent of vehicles cause pollution and older vehicles cause the most air pollution, so it would be appropriate to send them on scrap.

👉 Supply of raw materials at low prices

Vehicle Scrappage Policy

Another benefit of this scrap policy will be that we will get rubber, aluminum, steel at a lower price than abroad. So far all these items have been imported from abroad. Union Minister Nitin Gadkari said that when the old vehicles are sent to scrap dealers, the raw material can be obtained from there.

This can lead to the construction of new vehicles, due to which the cost of new vehicles will be reduced by about 30 percent. The introduction of new vehicles in the market, jobs will also be generated as well as supply of raw materials will also be available at a lower price.

👉 Incentives will be given on sending the car in scrap

The government will provide incentives once this policy is implemented on April 1, 2022. Union Road Transport and Highways Minister Nitin Gadkari has announced that the government will give a 5 percent discount on the purchase of new cars under the new scrap policy.

👉 There will be reduction in Government's Import Bill

The scrapping strategy will result in new vehicles coming in and new vehicles giving more mileage. At the same time, use of electric vehicles will also increase in place of old vehicles. This is likely to reduce the petroleum import bill of the central government, which will improve the country's economic situation.

Also, Read: Upcoming Electric Cars In India

👉 Vehicle prices will be reduced

The Ministry of Road Transport and Highways (MoRTH) estimates that the scrap policy will provide recycled raw materials from scrap vehicles such as copper, aluminum, plastic, steel, etc., and the cost of making new cars, buses and trucks for the automobile industry will be reduced.

It will also increase India's competitiveness in the international market. In such a situation, companies can reduce the cost of vehicles. It is also expected to reduce vehicle prices by 30 per cent. Apart from this, customs duty on steel has also been reduced in the budget. There is also a possibility of vehicle prices are expected to fall further.

Q1. What about Vintage Cars and Bikes?

According to sources, the same rule will apply to old vintage and classic cars and bikes. Although these special cars only come on the roads at certain times, the tax imposed on them may be slightly lower. Apart from this, there is another thing that these vehicles will be given a special 'Heritage' number plate. But this will be confirmed only when the ministry announces a full vehicle scrapping policy.

Q2. Is it necessary to send a vehicle in scrap?

This will not happen if you think your vehicles are completely useless after 15 or 20 years. As we told you above, this policy will be voluntary at this time. This means that it is up to you whether you want to send your vehicle in scrap or not, but for this you will have to get the fitness certificate of the vehicle.

👉 Further precautions must take before scraping the car :

  1. Scrap the car to an authorized dealer.
  2. Take the chassis number at this time.
  3. At this time the dealer must scrap the vehicle while maintaining environmental safety.
  4. Inform the RTO about car scraping and re-register the car.

👉 Here is how to scrap a car?

  • The scrap dealer determines the price according to the condition and weight of the car.
  • Dealers inspect all parts of the car after the contract. It sells plastic, rubber and iron. If the car has a CNG kit, it is destroyed in a certain way.
  • After all of the above procedures the car owner should make sure that their car is completely destroyed.

Remember This :

  • No need to give the original RC to the scrap dealer.
  • Photo taken while scraping the car is required for further processing in RTO,
  • After scraping, spare parts can be of great benefit to the dealer, so be careful when evaluating.
  • Follow RTO rules when scrapping cars.

👉 India will become the World's Largest Manufacturing Center

Union Road Transport and Highways Minister Nitin Gadkari said that in the coming years, India will be the largest manufacturing center for all types of cars, buses and trucks, where all types of fuels such as Ethanol, Methanol, Bio-CNG, LNG (Liquefied Natural Gas), Electric as well as Hydrogen Fuel Cell run Vehicles will be built on a large scale.

Also, Read: What Is FASTag? and How FASTag Works?

👉 Advantages and Disadvantages of Vehicle Scrappage Policy

Advantages

  • Employment will be available.
  • Pollution will be controlled. 
  • Supply of raw materials at low prices.
  • Incentive will be given on sending the car in scrap.
  • There will be a reduction in the government's import bill.
  • Vehicle prices will be reduced.

Disadvantages

  • Driving an old vehicle will be very expensive.
  • Vehicle registration fees will increase.
  • This is financially difficult for the average person with an old private vehicle.

Many things related to this policy are reveals, about which the Ministry of Road Transport and Highways (MoRTH) will soon issue new guidelines. The auto sector has been excited about this new vehicle scrappage policy of the government, most vehicle manufacturers have welcomed this policy.

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