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The Prime Minister of India Mr Narendra Modi, while addressing the investor summit in Gujarat 2021 introduced and launched the vehicle scrappage policy with the objective of phasing out old and unfit vehicles in an environment-friendly manner.

The main aim behind launching the vehicle Scrappage Policy is to establish a circular economy and take India one step ahead, making environment-friendly development of the economy of the country.

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 The Policy

The Vehicle Scrappage Policy where those which are old, unfit or polluting nature will be phased out. The implementation of the policy will be done once the vehicle has completed the registration period.

According to the Motor Vehicle laws in India, the estimated lifeline of a commercial vehicle is for 10 years, and the lifeline of a passenger vehicle is 15 years.

After the termination of the lifeline period of commercial and passenger vehicles, that is, 10 and 15 years, the vehicle has to go through mandatory fitness tests. According to a UN report, old vehicles pollute the environment many more times than fit and new vehicles.

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Implementation

According to the Vehicle Scrappage Policy 2021, heavy commercial vehicles older than 15 years will be phased out from April 1, 2023, whereas personal vehicles older than 20 years will be phased out from June 1, 2024.                                                        

Vehicles Fitness Test:-

The Vehicle Fitness test is essential and mandatory to understand the condition and standard of the vehicle and to come to the conclusion of whether the vehicle is fit or unfit and how much pollution it can cause to the environment.

The Vehicle has to undergo various tests and if the vehicle is unfit it will be scrapped out. If the vehicle is declared fit after going through the test then after every 5 years the vehicle has to go through the test to be updated with its quality. In order to renew the registration, and authentic certificate is required.     

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If Vehicle fails fitness test:-

The Government in the Vehicle Scrappage Policy has clearly mentioned the due process if a vehicle is unable to clear the fitness test. The vehicle which will fail the fitness test will be considered as ‘ELV’ that is an End of Life Vehicle and there will be no renewal of registration certificates of unfit vehicles.

The owner can apply for a re-test and re-inspection of the vehicle after making necessary repairs. If the vehicle is declared unfit again then the owner will be given the option to scrap the vehicle at ‘RVSF’s’ or Registered Vehicle Scrapping Facilities.

The policy does not put much focus on how old the vehicle is whereas it largely focuses on whether the vehicle is fit or unfit to continue its usage. The word unfit means that the vehicle cannot be restored or cannot be declared fit after making essential or necessary repairs.

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Incentives

The government has declared some incentives that will follow the policy and the incentives given will be

1. Owners' vehicles will get a scrap value equivalent to 4 per cent to 6 per cent of the ex-showroom price of the new vehicle that they would be purchasing. 

2. There will be zero registration fees for new vehicles purchased if the owner shows a certificate of deposit. 

3. State governments have to offer concessions on motor vehicle tax. The concessions include up to 25 per cent for non-transport vehicles and up to 15 per cent for transport vehicles. 

4. Vehicle manufacturers have been advised to provide a 5 per cent discount on the purchase of new vehicles against the certificate of deposit.
   
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Disincentives

Besides incentives the government also announced disincentives for not following scrapping policy and disincentives are:

The cost for renewal for fitness certificates for vehicles older than 15 years might go up to approximately 62 times for commercial vehicles and eight times for private vehicles. The state will also impose a green tax over the road tax. 

Registered Scrapping facilities

As an essential duty, the Government has decided to set up tech-based automated vehicle fitness testing stations. Initially, the Government has decided to set up around 100 scrapping stations which would be made functional in the next two years. The Government is also making further plans to expand and set up more registered scrapping stations.

The Government has also mentioned that any private entity, person or firm can set up, scrapping stations after getting an approval notice from the states or the Union Territories or from the concerned agencies.

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Benefits

The policy comes with some extraordinary advantages to the centre and to the economy of the country. The benefits of this policy according to the Union Minister Nitin Gadkari are:-

1. The Policy will help in raising the centre’s GST collection.

2. It will boost manufacturing, create employment and increase savings.

3. There will be a reduction in the cost of new vehicles as scrap wood provides copper, aluminium steel plastic rubber to the industry.

4. The policy can reduce the cost of raw materials by 40% which will lead to low prices resulting in higher sales of new vehicles.

Conclusion

The vehicle scrapping policy is a grand initiative taken by the government and brings many benefits to the people and economy of the country. It is a very crucial step to seize the intense pollution caused by unfit vehicles.           

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