Vehicle Scrappage policy: Tax rebate of up to 25% on new buys:

On 18th March 2021 the Road Transport and Highways Ministry unveiled the much awaited voluntary-vehicle fleet modernization program or “vehicle scrapping policy” which is aimed at creating an Eco-system for phasing out of Unfit and Polluting Air and improve road and vehicle safety, better fuel efficiency and boost the auto industry. According to the ministry of road transport and highways, there are 17 lakhs old medium and heavy commercial vehicles in India without a valid certificate. Also, the number of light motor vehicles older than 20 years is more than 51 lakhs
Under the new policy, commercial vehicles of more than 15 years and passenger vehicles of more than 20 years have to undergo a fitness test . A vehicle failing fitness test or failing to get a renewal of its registration certificate may be declared as ‘End of Life Vehicle’ and will have to be mandatorily scraped. A New measure has increased fees for fitness certificate and fitness test may be applicable for commercial vehicles after 15 years from the date of initial registration.
Vehicle owners who would voluntarily scrap their vehicles will get a rebate on road tax in the range of 15% to 25% and complete waiver of registration fees on the next new vehicle purchase. Automobile manufacturers will also have to offer a discount of 5% against a certificate of vehicle scrapping. Also, vehicle owners will get a value for their old vehicles from scrap yards which will be around 4-6% of the price of a new vehicle.
Gadkari said the new policy will boost the Indian automotive industry’s turnover by 30 percent to Rs 10 lakh crore in the coming years. from the current ₹4.5 lakh crore
As a direct result of the policy being put in place, up to 50,000 jobs and investments of around Rs 10,000 crore are expected to be generated.
Gadkari added that India’s automotive sector will be amongst those offering the highest employment opportunities in the country going forward.
Automobile manufacturers such as Maruti Suzuki, Toyota and Mahindra and Mahindra have already announced their investments for setting up vehicle dismantling centres across the country as these carmakers expect these centres to generate significant revenue in the next few years once scrapping of vehicles becomes a practice. Other vehicle manufacturers are also likely to open their scrapping centre. Overall, the policy will bring down cost of auto components as the scrapping yard of vehicle will also supply scrap steel and other components to automobile manufacturers and other industries and can increase India’s exports.
Rules for fitness centres and scrapping centres will come into effect from October 1st 2021, scrapping of government vehicles over 15 years can be done by April 1, 2022. Heavy CVs and other category vehicles must be mandatorily tested fitness by April 1, 2023, and June 1, 2024, respectively.