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The Ministry of Road Transport and Highway (MORTH) has issued a notification on 17-1-2023 for the de-registration and scrapping of all vehicles owned by central and state governments, including buses owned by transport corporations and public sector undertakings that are older than 15 years from April 1st 2023. 

The notification states-

"1. (1) These rules may be called the Central Motor Vehicles (First Amendment) Rules, 2023. (2) They shall come into force on the 1st day of April, 2023. 

2. In the Central Motor Vehicles Rules, 1989, after rule 52, the following rule shall be inserted, namely: –

52A. Renewal of certificate of registration of Government vehicles. – (I) Notwithstanding anything contained in rule 52, the certificate of registration in respect of a motor vehicle owned by – 

(i) the Central Government; or 

(ii) the State Government or Union Territory administrations; or 

(iii) any Municipal Corporation or Municipality or Panchayat; or 

(iv) a state transport undertaking established under the Road Transport Corporation Act, 1950 (64 of 1950) and the Companies Act, 2013 (18 of 2013); or

(v) a public sector undertaking; or 

(vi) an autonomous body owned or controlled by the Central Government or the State Government, shall expire after the lapse of fifteen years, as provided in sub-section (7) of section 41, from the date of initial registration of the vehicle: 

Provided that the certificate of registration of government vehicle if already renewed before lapse of fifteen years from the date of initial registration, such certificate shall be treated as cancelled on completion of fifteen years from the date of initial registration of the vehicle: 

Provided further that, this rule shall not apply to the special purpose vehicles (armoured and other specialised vehicles) used for operational purposes for defense of the country and for the maintenance of law and order and internal security.

(2) Disposal of such vehicles shall, after the expiry of the fifteen years from the date of initial registration of the vehicle, be ensured through the Registered Vehicle Scrapping Facility set up in accordance with the Motor Vehicles (Registration and Functions of Vehicle Scrapping Facility) Rules, 2021, as amended from time to time.”

Applicability: Applicable on Government Vehicles with exception of special purpose vehicles used for operational purposes for defense and for maintenance of law and order and internal security.

Benefits:

Vehicle scrapping policy offers several benefits such as-

Environmental benefits: Old vehicles are often less fuel-efficient and emit more pollutants than newer models. Scrapping these older vehicles can reduce emissions and improve air quality.

Safety benefits: Older vehicles may not meet current safety standards, which can put drivers, passengers, and other road users at risk. Scrapping these vehicles can help remove unsafe cars from the road.

Economic benefits: Scrappage programs can stimulate demand for new vehicles, which can boost the automotive industry and support jobs. Additionally, newer vehicles are often more fuel-efficient, which can save drivers money on fuel costs over time.

Reduced dependence on foreign oil: Scrapping older vehicles can also help reduce dependence on foreign oil by encouraging the use of newer, more fuel-efficient vehicles or electric vehicles.

Recycling benefits: Scrapped vehicles can be recycled, which can reduce the amount of waste sent to landfills and conserve natural resources.

Finance Minister Nirmala Sitharaman in her budget speech on 1st February 2023 states “Replacing old polluting vehicles is an important part of greening our economy. To further the vehicle scrapping policy mentioned in Budget 2021-22, I have allocated funds to scrap old vehicles of the Central government. States will also be supported in replacing old vehicles and ambulances."

"Now, we have approved the scrapping of more than nine lakh government vehicles, which are more than 15 years old, and polluting buses and cars will go off the road and new vehicles with alternative fuels will replace them. This will further reduce air pollution to a great extent," Union Transport Minister Nitin Gadkari mentioned in a speech.

Incentives on scrapping old vehicles:

The finance ministry recently allotted Rs 2,000 crore as special assistance for states in an effort to persuade state governments to scrap vehicles older than 15 years and offer road tax concessions to private individuals who purchase a new vehicle in exchange for scrapping their old vehicles. A dozen states and union territories have joined to offer motor vehicle tax or road tax breaks when purchasing new vehicles after scrapping old ones. Assam, Madhya Pradesh, Maharashtra, Odisha, and Mizoram are among the five states that have announced a one-time waiver of pending liabilities on vehicles older than 15 years that are scrapped at Registered Vehicle Scrapping Facilities (RVSFs).

References:

https://taxguru.in/corporate-law/central-motor-vehicles-first-amendment-rules-2023.html

https://www.livemint.com/news/india/vehicle-scrapping-will-provide-fillip-to-economy-fm-sitharaman-11675232727922.html

https://m.timesofindia.com/business/india-business/states-offer-tax-incentives-for-scrapping-old-vehicles/articleshow/97932231.cms