How Vehicle Scrappage Policy Affects Old Car Owners in India

Introduction

The Indian government’s Vehicle Scrappage Policy, officially known as the Voluntary Vehicle-Fleet Modernisation Programme, is a landmark initiative aimed at phasing out old, polluting, and unsafe vehicles from the roads. While the policy has broad environmental and economic goals, its most direct impact is on the millions of owners of older cars and bikes across the country.

If you own a car that is over 15 or 20 years old, this policy is not just news—it’s a regulation that will directly affect your ownership and the vehicle’s future. This guide breaks down the policy in simple terms, explaining what it is, how it works, the benefits it offers, and the step-by-step process you need to follow when the time comes to scrap your old vehicle.

What is the Vehicle Scrappage Policy? The policy is a framework to create an ecosystem for phasing out end-of-life vehicles (ELVs) in an organized, environmentally sound manner. Its core objectives are:

•       Reduce Vehicular Pollution: Get old, polluting vehicles (BS-I to BS-III) off the road.
•       Improve Road Safety: Remove unsafe vehicles that lack modern safety features.
•       Boost Economy: Stimulate demand for new vehicles and create a circular economy for automotive recycling.

Key Rules: Mandatory Fitness Testing The policy mandates that all vehicles must undergo a automated fitness test at an Automated Testing Station (ATS) after a certain age:

•       Commercial Vehicles: Require a fitness certificate after 8 years and then again after 12 years. Post 15 years, they need a fitness certificate every year.
•       Private Vehicles: Require a mandatory fitness test after 15 years, and thereafter, a renewal every 5 years.

Failure to pass the fitness test will result in the vehicle being de-registered and declared an End-of-Life Vehicle (ELV), meaning it must be scrapped.

Benefits of Scrapping Your Old Vehicle

The government is incentivizing voluntary scrapping through significant benefits:

1. Monetary Benefits:

•       Scrap Value: You will receive the ex-showroom price of the scrap materials (like steel, aluminium, plastic, etc.) from the Registered Vehicle Scrapping Facility (RVSF). This is typically 4-6% of the vehicle’s ex-showroom value.
•       Road Tax Rebate: You can get a rebate of up to 25% on the road tax for a new passenger vehicle purchased against the scrapping certificate.
•       Registration Fee Waiver: You can get a complete waiver on the registration fee for the new vehicle.

2. Vehicle Purchase Benefits:

•       Discount from OEMs: Major car manufacturers (Maruti Suzuki, Tata, Mahindra, Hyundai, etc.) have announced additional discounts (typically ₹15,000 to ₹50,000 or more) on the purchase of a new vehicle against a valid scrapping certificate.
•       Better Resale Value (for newer cars): By removing old, inefficient cars from the market, the policy will help improve the resale value of relatively newer (5-10 year old) vehicles.

3. Environmental & Safety Benefits:

•       Cleaner Air: An old car (BS-I) can be 10-25 times more polluting than a new BS6 car.
•       Safer Roads: You upgrade to a modern car with mandatory safety features like airbags, ABS, and potentially ADAS.
•       Fuel Savings: A new car is significantly more fuel-efficient, saving you money on every trip.

The Step-by-Step Process to Scrap Your Vehicle

1.   Find an RVSF: Locate a government-approved Registered Vehicle Scrapping Facility (RVSF) near you. The government is setting these up across the country.
2.   Submit Documents: Visit the RVSF with the following documents:
3.       Registration Certificate (RC) of the vehicle
4.       PAN Card
5.       Aadhaar Card
6.   Vehicle Verification: The RVSF will verify the vehicle and its documents to ensure it is not involved in any legal case or theft.
7.   Deregistration (Optional): You can apply for deregistration at the RTA/RTO by submitting the “Certificate of Deposit” from the RVSF. The RVSF can also facilitate this process.
8.   Scrapping: Once verified, the vehicle is scrapped in an environmentally friendly way. The process includes draining all fluids, dismantling, and recycling materials.
9.   Receive Certificate: After scrapping, you will receive a “Certificate of Vehicle Scrapping” from the RVSF. This is the most important document.
10.   Avail Benefits: Use this certificate to avail the benefits (road tax rebate, registration waiver, OEM discount) when purchasing a new vehicle.

What if You Don’t Scrap an Old Vehicle?

•       Increased Re-Registration Fees: The policy proposes a significant hike in re-registration fees for private vehicles after 15 years, making it financially unattractive to keep them.
•       No Fitness Certificate: If your vehicle fails the mandatory fitness test, it will be de-registered. Driving a de-registered vehicle is illegal and can lead to heavy fines and impounding.

Conclusion

Is It Time to Let Go? The Vehicle Scrappage Policy is a clear signal from the government: it’s time to modernize India’s vehicle fleet. If you own an old car, especially a pre-BS4 model, the policy makes a compelling case to voluntarily scrap it. The combined benefits of a scrap value, tax rebates, manufacturer discounts, and massive savings on fuel and maintenance make upgrading to a new, safer, and cleaner car a financially and environmentally sound decision. Instead of viewing it as the end of an era, see it as an opportunity to start a new, more efficient, and safer one.

FAQs

1. Is the scrappage policy mandatory for all old cars? No, it is voluntary. However, the policy makes it financially and administratively difficult to keep very old vehicles (15+ years) running by mandating strict fitness tests and increasing re-registration costs. Failing the fitness test makes scrapping mandatory.
2. My 15-year-old car is in great condition. Do I still have to scrap it? No, you don’t have to scrap it if it passes the mandatory fitness test at an Automated Testing Station (ATS). You can re-register it and continue using it. However, you will not receive the scrappage benefits, and the re-registration fee will be higher.
3. How much money will I get for scrapping my old Maruti 800? The scrap value is based on the ex-showroom price of the materials (steel, aluminium, rubber, etc.). For a small car like the Maruti 800, the scrap value might be between ₹10,000 to ₹20,000. The bigger financial benefits come from the tax rebate and OEM discount on your new car purchase.
4. Can I sell my old car to a kabadiwala (local scrap dealer) instead? You can, but you will not receive the official “Certificate of Vehicle Scrapping.” Without this certificate, you cannot avail any of the government incentives (road tax rebate, registration waiver) or manufacturer discounts on your new car purchase.
5. What happens if I am caught driving a car that failed the fitness test? Driving a vehicle that has been de-registered due to failing the fitness test is illegal. It can lead to a hefty fine under the Motor Vehicles Act, and the vehicle may be impounded by the traffic police.

Tags: Vehicle Scrappage Policy, Scrap Old Car, Fitness Certificate, RVSF, Scrappage Benefits, Road Tax Rebate, End of Life Vehicle, Government Policy India.